In this article, we will be taking a look at Jim Cramer’s top stock picks for 2023. To skip our detailed analysis of the market’s current condition, you can go directly to see Jim Cramer’s Top 5 Stock Picks for 2023.
According to a CNBC article published this February, Cramer believes that the Federal Reserve was inching closer to beating inflation, despite what Wall Street thinks. The US economy has been in a state of downturn, making the market highly vulnerable and investors more cautious about investing in new companies.
Cramer has still named stocks like Netflix, Inc. (NASDAQ:NFLX), Meta Platforms, Inc. (NASDAQ:META), and Advanced Micro Devices, Inc. (NASDAQ:AMD) as some of the options investors should consider for their portfolios this year, considering his own optimism regarding the market. He has added that price stability is just around the corner, and while some weaker companies will most likely never be able to recover, high-end companies will manage to survive.
While the Federal Reserve does not seem to be relenting entirely when it comes to interest rates, the hikes have gotten smaller.
Let’s now take a look at Jim Cramer’s top stock picks for 2023.
Our Methodology
We have selected 10 stocks that have been named by Jim Cramer on CNBC’s Mad Money this January as his top picks for 2023. We have also mentioned analyst ratings for these stocks, ensuring they are positive. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest.
Jim Cramer’s Top Stock Picks for 2023
10. Stanley Black & Decker Inc (NYSE:SWK)
Number of Hedge Fund Holders: 26
Stanley Black & Decker, Inc. (NYSE:SWK) is an industrial machinery company based in New Britain, Connecticut. It operates in the US, Canada, the rest of the Americas, France, the rest of Europe, and Asia. The company offers products like professional-grade corded and cordless electric power tools and equipment.
On February 5, Barclay analyst Julian Mitchell reiterated an Overweight rating on Stanley Black & Decker, Inc. (NYSE:SWK) shares.
This January, Jim Cramer recommended that investors should start a small position in Stanley Black & Decker, Inc. (NYSE:SWK) in 2023 and gradually buy more. He believes that the stock will continue to see gains in 2023 after its performance last year. Revenues for Stanley Black & Decker, Inc. (NYSE:SWK) have increased by almost 70% over the past ten years. The stock’s most attractive quality, however, is its status as a dividend king, with a record of 55 years of dividend increases. It has a yield of 3.59% as of February 14.
Greenhaven Associates was the largest stakeholder in Stanley Black & Decker, Inc. (NYSE:SWK) in the fourth quarter, holding 1.3 million shares. In the third quarter, 26 hedge funds were long the stock, with a total stake value of $447 million.
Ariel Investments, an investment management company, mentioned Stanley Black & Decker, Inc. (NYSE:SWK) in its third-quarter 2022 investor letter. Here’s what the firm said:
“Shares of Stanley Stanley Black & Decker, Inc. (NYSE:SWK) sharply declined in the quarter as inflation and rapidly rising rates drove a swift deterioration in consumer demand. In response, SWK is laser-focused on reducing inventory to generate cash flow and re-sizing the cost base through simplifying its corporate structure, optimizing operations and transforming the supply chain. Though the macroeconomic backdrop remains challenging, we have conviction in SWK’s experienced executive management team and think the balance sheet is well-positioned to weather the storm. At current levels, SWK is trading at a substantial, historically-high discount to our estimate of private market value.”
Stanley Black & Decker, Inc. (NYSE:SWK), like Netflix, Inc. (NASDAQ:NFLX), Meta Platforms, Inc. (NASDAQ:META), and Advanced Micro Devices, Inc. (NASDAQ:AMD), is among Jim Cramer’s top stock picks for 2023.
9. American Electric Power Company, Inc. (NYSE:AEP)
Number of Hedge Fund Holders: 35
American Electric Power Company, Inc. (NYSE:AEP) is a utility company based in Columbus, Ohio. The company engages in the generation, transmission, and distribution of electricity for sale in the US.
Neil Kalton at Wells Fargo holds an Equal Weight rating on American Electric Power Company, Inc. (NYSE:AEP) shares as of February 1.
In January, Cramer named American Electric Power Company, Inc. (NYSE:AEP) as one of the stocks he believes to be a worthwhile addition to investors’ portfolios. He likes the stock because the company is well-run, and utility companies are known to perform well in an economic downturn. American Electric Power Company, Inc. (NYSE:AEP) is also a dividend stock with a 3.64% yield as of February 14 and 13 years of dividend growth. Company management is also guiding for long-term 6%-7% annual operating earnings growth as of this February.
There were 35 hedge funds long American Electric Power Company, Inc. (NYSE:AEP) in the third quarter, with a total stake value of $671.3 million.
8. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 46
Northrop Grumman Corporation (NYSE:NOC) is an aerospace and defense company based in Falls Church, Virginia. The company designs and manufactures aircraft systems in the US and internationally. It also offers unmanned autonomous aircraft systems.
An Outperform rating was reiterated on Northrop Grumman Corporation (NYSE:NOC) shares on February 6 by Credit Suisse analyst Scott Deuschle.
Jim Cramer this January commented that Northrop Grumman Corporation (NYSE:NOC) could be the best defense contracted to own as the Russo-Ukrainian war persists. In the fourth quarter, the company had robust sales growth of 16% year-over-year. Company management expects Northrop Grumman Corporation (NYSE:NOC) to see a 20% compound annual growth in its multi-year cash flow outlook, while analysts expected annual EPS growth of 10%-12% in 2024-2025.
There were 46 hedge funds long Northrop Grumman Corporation (NYSE:NOC) in the third quarter, and their total stake value in the company was $1.1 billion. Yacktman Asset Management was the largest stakeholder in the company in the fourth quarter, holding 410,428 shares in the company.
LRT Capital Management, an investment management firm, mentioned Northrop Grumman Corporation (NYSE:NOC) in its fourth-quarter 2022 investor letter. Here’s what the firm said:
“Based in Virginia, Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors with annual revenue more than $30 billion. The company operates in a cozy oligopoly, that after decades of consolidation the US defense market is now controlled by five large companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and Raytheon Technologies Corporation (RTX).
Industry barriers to entry are immense, government procurement cycles are extremely long, and the consolidated industry structure reflects this. This industry structure has allowed Northrop to earn stable mid-teens returns on invested capital (ROIC) and grow earnings per share at a rate of over 13% per year in the past decade, despite a topline that has grown only in-line with inflation. Even after the recent run-up in the stock price, it trades at approximate 15x, next year’s earnings estimates, far below the S&P 500 index, despite being an above average company. While nominally, there are five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ division submarine division, Electric Boat, is the sole supplier of nuclear power submarines in the United States. Lockheed Martin is the sole supplier of the F-35 and F-22. Northrop was the sole bidder on the contract to develop the next generation of intercontinental ballistic missiles; and so on…” (Click here to read the full text)
7. Halliburton Company (NYSE:HAL)
Number of Hedge Fund Holders: 48
Halliburton Company (NYSE:HAL) is an energy company based in Houston, Texas. The company operates through its Completion and Production, and Drilling and Evaluation segments. It offers production enhancement services, including stimulation and sand control services, among more.
HSBC analyst Abhishek Kumar holds a Buy rating on Halliburton Company (NYSE:HAL) shares as of January 30.
Cramer predicts that Halliburton Company (NYSE:HAL) shares have a multi-year rally ahead of them, and he has thus named the stock as one of his top picks for 2023. In the fourth quarter, the company reported a net profit of $656 million, or $0.72 per diluted share, up from $544 million, or $0.6 per share, in the previous quarter. Halliburton Company (NYSE:HAL) had a full-year revenue of $20.3 billion, demonstrating an increase of 33% year-over-year.
Our hedge fund data for the third quarter shows 48 hedge funds long Halliburton Company (NYSE:HAL), with a total stake value of $1 billion.
Carillon Tower Advisers, an investment management company, mentioned Halliburton Company (NYSE:HAL) in its fourth-quarter 2022 investor letter. Here’s what the firm said:
“Halliburton Company (NYSE:HAL) provides equipment and services to the global energy industry. Shares have been on an impressive trajectory recently, outpacing the notable move in the overall oilfield services and equipment group. Halliburton benefits from the ongoing upswing in global upstream spending and should play a pivotal role in helping exploration and production companies navigate the recent productivity declines in North American shale. The tight services and equipment market has resulted in strong pricing gains and margin expansion, and when coupled with a disciplined approach to capital spending, has paved the way for the stock’s outperformance.”
6۔ McKesson Corporation (NYSE:MCK)
Number of Hedge Fund Holders: 51
McKesson Corporation (NYSE:MCK) is a healthcare company based in Irving, Texas. The company distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare products.
Morgan Stanley’s Erin Wright holds an Overweight rating on McKesson Corporation (NYSE:MCK) shares as of February 2.
Cramer likes McKesson Corporation (NYSE:MCK) in 2023 because he believes that stocks of drug distributors tend to perform well during an economic downturn. In the third quarter, the company’s EPS was $6.9, up 12% year-over-year and higher than the consensus estimates of $6.35. Since McKesson Corporation (NYSE:MCK) also drastically decreased its operating costs in that quarter, it generated an operating profit of $1.39 billion as well.
Pzena Investment Management was the largest stakeholder in McKesson Corporation (NYSE:MCK) in the fourth quarter, holding 973,538 shares. A total of 51 funds were long the stock in the third quarter, with a total stake value of $4.1 billion
Baron Funds, an investment management company, mentioned McKesson Corporation (NYSE:MCK) in its third-quarter 2022 investor letter. Here’s what the firm said:
“McKesson Corporation (NYSE:MCK) is a leading distributor of pharmaceuticals and medical supplies. The company also provides prescription technology solutions that connect pharmacies, providers, payers, and biopharmaceutical customers. The stock price rose on solid financial results as its business is less exposed to current macroeconomic headwinds. We continue to have conviction that McKesson can grow earnings per share by an average of 12% to 14% annually and think the stock is still reasonably valued.”
McKesson Corporation (NYSE:MCK), like Netflix, Inc. (NASDAQ:NFLX), Meta Platforms, Inc. (NASDAQ:META), and Advanced Micro Devices, Inc. (NASDAQ:AMD), is one of the stocks that is expected to perform well through 2023.
Click to continue reading and see Jim Cramer’s Top 5 Stock Picks for 2023.
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Disclosure: None. Jim Cramer’s Top Stock Picks for 2023 is originally published on Insider Monkey.