The United States grappled with a serious problem in 2022: runaway inflation.
High inflation coupled with rising Treasury yields around the world and a Federal Reserve that’s trying to rein in inflation by hiking key interest rates led to very bad year for the U.S. economy and the stock market in 2022.
As a result, Wall Street and Main Street alike were hit hard.
Although inflation is beginning to tap the brakes this year, we are still far from the Fed’s 2% inflation mandate. So, there could still be more pain ahead.
While I’m sure this isn’t what you want to hear, there is some good news…
If you’re invested in the right stocks, you can still make money in this inflationary environment.
Historically, growth stocks and dividend stocks are your best defense against rising inflation. The reality is that stocks are great inflation hedges because they represent ownership in real businesses.
Even better, great businesses function as inflation “pass through” vehicles. An inflation “pass through” vehicle is a business that “passes along” the price increases that result from inflation.
The nominal price of inputs and product prices might change, but the businesses’ profit margins do not. They simply “pass through” the inflation, which allows their profits and market values to rise along with prices.
Of course, you don’t want to invest in just any stock. You want the best of the best… the companies whose growth won’t be curtailed by inflation and will continue to boast strong earnings and sales growth.
In this report, I’m going to show you 11 companies that have emerged as the crème de la crème that you should buy in 2023.
With strong sales growth and profits ahead, these stocks are must-haves for your portfolio as we navigate our way through this inflationary environment…
Top Stock for 2023 #1: ACLS
For more than 40 years, Axcelis Technologies, Inc. (ACLS) has provided equipment and services to leading semiconductor companies around the world. Specifically, the company offers ion implant platforms that better optimize the semiconductor fabrication process. Axcelis Technologies’ Purion platform has been particularly popular, as it addresses many of the challenges that companies face during semiconductor fabrication.
Axcelis Technologies has more than 800 technology patents and 3,000 tools in use around the world. In fact, its platform is used in 32 countries. Not surprising considering that the company tailors its platforms to meet its customers’ specific needs and fabrication goals.
During fiscal year 2022, Axcelis Technologies achieved revenue that surpassed its $850 million revenue model. Full-year revenue increased 38.9% year-over-year to $920 million, while earnings jumped 85.5% year-over-year to $183.1 million, or $5.46 per share. These results bested estimates for earnings of $5.04 per share on $902.59 million.
Looking forward, Axcelis Technologies anticipates that it will report revenue north of $1.0 billion in 2023, and as such, the company unveiled a new revenue model of $1.3 billion that it expects to achieve in the next two to three years.
Top Stock for 2023 #2: ARLP
Back in 1999, Alliance Resource Partners, L.P. (ARLP) became the first publicly traded master limited partnership (MLP) in the coal industry. Interestingly, though, Alliance Resource Partners has been in the coal mining business since 1971.
Today, the company is the second-largest producer of coal in the eastern U.S., with underground mining operations in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. It sold 28.2 million tons of coal in 2020, and 32.3 million tons of coal in 2021.
In addition to its coal operations, Alliance Resource Partners has oil and gas mineral and royalty interests in key producing regions in the U.S. That includes the Permian Basin, the Anadarko Basin and the Williston Basin.
Thanks to higher coal sales coupled with oil and gas royalties revenue, for its fiscal year 2022, Alliance Resource Partners announced earnings of $577.2 million, or $4.39 per share, and revenue of $2.4 billion.
That translates to 223.9% annual earnings growth and 53.3% annual revenue growth. Both were new records and topped expectations for full-year earnings of $4.20 per share on $2.39 billion in revenue.
Company management also remains optimistic about 2023, given the ongoing Russia-Ukraine conflict and its impact on energy supplies. They noted in their press release:
Due in part to this ongoing disruption, ARLP is well positioned to achieve another record year in 2023 by increasing production and sales by one to two million tons and relying on our highly committed coal contract book and favorable market outlook to deliver 13% to 17% higher realized pricing compared to 2022.
For full-year 2023, analysts project earnings of $5.77 per share on revenue of $2.83 billion. This compares to earnings of $4.39 per share and revenue of $2.41 billion in the year prior.
Top Stock for 2023 #3: ATKR
Since its founding back in 1959, innovation has been at the heart of Atkore, Inc. (ATKR).
In fact, the company patented the Flo-Coat galvanizing process, which applies zinc as tubes and pipes are being manufactured. The process has been the foundation of Atkore’s manufacturing process since its first single tube mill opened its doors in 1960.
Today, Atkore is a leading manufacturer of galvanized steel tubing and pipe products, including electrical conduits, flexible sprinkler pipe and light gauge steel tubes. The company’s products are sold under several brand names: Allied Tube & Conduit – the company’s original name – as well as FlexHead and Tectron Tube. Atkore also produces electrical support system products under the Unistrut, Power-Strut and Cope brand names, as well as other electrical cables, conduits, PVC and cable protection products.
Atkore offers a portfolio of electrical raceway and mechanical products and solutions used in more than 50 end markets. This includes agriculture, commercial construction, industrial and power generation, as well as federal, state and local governments.
And Atkore services its customers through 65 manufacturing and distribution facilities around the world.
Looking forward, Atkore now expects fiscal 2023 adjusted earnings per share to be between $15.85 and $17.75.
Top Stock for 2023 #4: BP
BP p.l.c. (BP) is a familiar name to most, as the company has been around for more than 100 years.
Back in 1901, William D’Arcy risked his fortune to drill for oil in Persia (present-day Iran). But it wasn’t until late May in 1908 when oil actually spewed from a “last chance” well in a remote area of Persia. One year later, the Anglo-Persian Oil Co. was in business.
Over the years, the Anglo-Persian Oil Co. was on the verge of bankruptcy several times, as oil exploration in Persia was slow and plagued with delays. If that wasn’t discouraging enough, the company had a hard time selling the thick Persian oil. That’s when Winston Churchill, in 1914, entered the picture, as he was looking for a dedicated oil supply for the British Royal Navy, which he led at the time.
The United Kingdom became a major shareholder in the company.
After that, the “BP” oil brand became a familiar sight, as BP gasoline pumps started popping up all over the United Kingdom to keep up with the rise in vehicles hitting the streets in the 1920s and 1930s.
The company took a hit during World War II like many businesses, and then another hit when Iran nationalized oil operations. But the company didn’t throw in the towel. It changed its name to The British Petroleum Co. in 1954 and started looking for other oil exploration opportunities.
Today, BP has a vast portfolio of upstream and downstream businesses around the globe and operates in 70 countries. The company engages in oil and natural gas exploration, field development and production. It produces 3.6 million barrels of oil equivalent per day.
BP also manufactures fuels, lubricants and petrochemicals. The company has been at the forefront of alternative energy, investing in biofuels, biopower, wind energy and solar. And it operates more than 18,000 retail sites.
For its fiscal year 2022, BP achieved earnings of $8.74 per ADS or 128.8% annual earnings growth. The consensus estimate called for full-year earnings of $8.80 per ADS. Full-year operating revenue jumped 53% year-over-year to $241.39 billion, which also beat estimates for $229.55 billion.
Company management also has big plans for 2023:
bp expects underlying production from oil production & operations to be slightly higher and production from gas & low carbon energy to be lower. bp expects the start-up of Mad Dog Phase 2 in the second quarter of 2023 and first gas from the Tangguh expansion and GTA Phase 1 Tortue projects in the fourth quarter of 2023.
Top Stock for 2023 #5: CALM
Cal-Maine Foods, Inc. (CALM) is the largest producer and distributor of eggs in the U.S., with operations primarily in the southern half of the country. The company currently runs breeding facilities, hatcheries, feed mills, shell production facilities, distribution centers, processing and packaging facilities, pullet growing facilities and egg product facilities.
While egg prices dipped 6.7% in February, prices were still more than 55% higher than prices back in February 2022—and these elevated prices added handsomely to Cal-Maine Foods’ top and bottom lines in fiscal year 2023.
Egg prices are expected to continue to rise in 2023, as the avian flu continues to ravage flocks and keep egg prices high. As such, the analyst community expects full-year 2023 earnings of $16.43 per share and revenue of $3.17 billion, up from earnings of $2.72 per share and revenue of $1.78 billion in the prior year.
Top Stock for 2023 #6: COP
ConocoPhillips (COP) is one of the largest independent oil and natural gas exploration and production companies in the world. The company does a little bit of everything when it comes to those products, extracting with hydraulic fracturing, horizontal drilling and offshore drilling, as well as producing and transporting the product.
In fact, ConocoPhillips has an extensive energy portfolio that spans 14 countries. The company transports oil and natural gas around the world through pipelines, as well as tankers, trucks and rail. As a result, ConocoPhillips benefited immensely from rising crude oil prices, and I expect it to continue to prosper as crude oil prices climb higher in the spring and summer months.
Full-year adjusted earnings soared 116.3% year-over-year to $17.3 billion, or $13.52 per share in 2022, compared to $8.0 billion, or $6.01 per share, in 2021. The consensus estimate called for full-year adjusted earnings of $14.00 per share.
ConocoPhillips also noted that full-year production came in at 1,738 million barrels of oil equivalent per day (Mboed). At the end of the year, the company had proved reserves of about 6.6 billion barrels of oil.
For 2023, the company expects full-year production to be between 1.76 and 1.80 million barrels of oil equivalent per day (MMBOED). Adjusted operating costs in 2023 are estimated to be $8.2 billion.
Top Stock for 2023 #7: ENPH
Enphase Energy, Inc. (ENPH) developed the first microinverter system back in June 2008. Microinverters are vital to solar panels, as microinverters convert sunshine into usable electricity for homes and businesses. So, it’s not too surprising that Enphase Energy has installed more than 1 million of its microinverters.
In the past 12 years, Enphase has shipped more than 23 microinverters around the world. The Silicon Valley company now has more than 6.5 gigawatts DC of its systems installed in 130 countries.
During the fourth quarter of 2022, Enphase Energy shipped 4.87 million microinverters, which translates to about 1,952.4 megawatts DC, and 122.1 megawatt hours of Enphase IQ Batteries. Strong demand for its products added handsomely to its top and bottom lines.
For fiscal year 2022, Enphase Energy achieved earnings of $4.62 per share and total revenue of $2.33 billion. That translates to 91.7% annual earnings growth and 68.7% annual revenue growth. These results also bested estimates for earnings of $4.44 per share on $2.31 billion in revenue.
Top Stock for 2023 #8: GMS
GMS, Inc. (GMS), or Gypsum Management and Supply, is a leading distributor of interior building products in the U.S. and Canada – and it’s been in business since 1971. The company dubs itself as a “one-stop-shop” for its customers’ needs, as it has more than 250 “yards” or distribution centers throughout the U.S. and Canada where customers can fulfill all of their building product needs.
GMS offers more than 20,000 products, including gypsum wallboard, FRP boards, insulation, metal framing, acoustical products, read-mix joint compound, ceiling tiles, fiberglass panels, and other supplies like tape, knives, fasteners, and power tools. The company’s primary customers are contractors, builders, construction professionals and do-it-yourselfers.
Third-quarter sales rose 7% year-over-year to $1.2 billion, relatively in line with expectations for $1.21 billion. Earnings grew 5.5% year-over-year to $64.8 million, or $1.53 per share, up from $61.4 million, or $1.40 per share in the third quarter of 2022. Adjusted earnings increased 2.4% year-over-year to $78.3 million, or $1.85 per share.
For the company’s fourth quarter in fiscal year 2023, analysts anticipate earnings of $1.89 per share and revenue of $1.26 billion.
Top Stock for 2023 #9: KEYS
Keysight Technologies, Inc. (KEYS) is a leading technology company that helps its engineering, enterprise and service provider customers accelerate innovation to connect and secure the world. Its solutions help bring electronic products to market faster at a lower cost. Its customers work in communications, aerospace and defense, automotive, energy, Internet of Things (IoT), data centers, semiconductor and general electronics end markets.
Keysight Technologies boasts that the Top 25 tech companies rely on its solutions and services. The Silicon Valley company also has more than 30,000 customers, including big names like Apple, Amazon, Google, Microsoft, Facebook, NVIDIA, Taiwan Semiconductor, Tesla and NASA, in more than 100 countries around the world, and it has more than 3,500 issued or pending patents.
Keysight has three main businesses:
- The Communications Solutions Group provides radio frequency and microwave test instruments, as well as electronic design automation software tools.
- Electronics Industrial Solutions offers design and design verification tools, as well as general purpose, test and management products.
- And the Services Solutions Group provides repair, calibration and consulting services.
But what really has me excited about Keysight right now is the company’s involvement in 5G. Company management is committed to helping its customers adapt to 5G technology through its design and test solutions, ensuring its customers’ products meet current cellular standards.
During its second quarter in fiscal year 2023, Keysight Technologies achieved record revenue of $1.39 billion, or 3% year-over-year revenue growth. Earnings grew 13.8% year-over-year to $380 million, or $2.12 per share, compared to $334 million, or $1.83 per share in the second quarter of 2022. The consensus estimate called for earnings of $1.95 per share on $1.38 billion in revenue.
Looking forward to its third quarter in fiscal year 2023, Keysight Technologies expects revenue between $1.37 billion and $1.39 billion and earnings per share between $2.00 and $2.06. That compares to revenue of $1.35 billion and earnings of $1.83 per share in the third quarter of 2022. The outlook is also nicely higher than analysts’ current expectations.
Top Stock for 2023 #10: NRT
Back in 1975, North European Oil Royalty Trust (NRT) was formed to manage royalties from the German subsidiaries of Exxon Mobil and Royal Dutch Shell. The trust holds the royalties, which are paid on a quarterly basis and derived from natural gas, oil and sulfur sales in northwestern Germany.
Thanks to higher gas prices for both of its royalty agreements, NRT achieved total third-quarter royalty income of $4.44 million in fiscal year 2022. That represented a 200% year-over-year increase from $1.48 million in the third quarter of fiscal year 2021.
The company also achieved stunning triple-digit earnings and revenue growth for its first quarter in 2023. First-quarter revenue soared 284% year-over-year to $9.79 million, while earnings surged 306% year-over-year to $9.54 million. First-quarter earnings per share increased 300% year-over-year to $1.04, up from $0.26 per share in the same quarter last year.
Top Stock for 2023 #11: RMBS
The explosion in artificial intelligence (AI), 5G, autonomous vehicles and Internet of Things (IoT) have all boosted data usage and strained data infrastructure in recent years. Our final Top Stock for 2023 is positioned to provide the solutions necessary to protect data and create fast connections.
Over the past 32 years, Rambus, Inc. (RMBS) has developed chips and internet protocol (IP) to enhance data center connectivity and security, as well as better connect memory and processing. The company’s memory interface chips allow high-speed connections, while at the same time don’t hinder memory capacity. Its Interface IP enables data to move quickly, even for the most-demanding applications. And its Security IP protects data.
Rambus developed the industry’s first and fastest DDR5 memory interface chips – and today, the company has more than 3,000 patents and applications. I should add that its patents are recognized by several well-known industry giants, including Intel, Samsung, Apple, Micron Technology, Alphabet, Sony, Panasonic and Texas Instruments.
Thanks to its data center business and variety of product lines, Rambus achieved robust results in its fourth quarter 2022. The company reported fourth-quarter adjusted earnings of $0.68 per share and revenue of $155.30 million, which topped analysts’ estimates for adjusted earnings of $0.47 per share and revenue of $151.94 million.
For full-year 2023, analysts are calling for earnings of $1.76 per share and revenue of $594.32 million.
There’s Always a Bull Market Somewhere
There’s always a bull market somewhere – and right now the bulls are piling into fundamentally superior stocks that will profit from runaway inflation.
The 11 top stocks we discussed today fit this description to a “T” and are great bets for your money in 2023.
I hope you found this special report useful. Before we go, let me remind you that you’re now also a member of my free Market 360 newsletter.
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Sincerely,
Louis Navellier
