The six days between Christmas and New Year’s are notoriously slow, so here we have 5 fantastic stocks to break the lull.

As we indicated last week, there isn’t much going on during this mid-holiday week, and it almost appears that Wall Street is taking a break.

However, we believe that now is the ideal time to anticipate what 2023 may bring – and the profit opportunities that may arise.

So, here are our top 2023 stocks…

AutoZone Inc.

I was looking for a new automobile a few months ago and settled on the Ford Maverick.

I was eager to begin because I knew there would be an orderly process to navigate. When I called the dealer,

I was told that demand was so high and inventories were so limited that I couldn’t place an order.

With growing auto prices and a scarcity of vehicles, I am not alone. I’ll just have to wait if I don’t want to pay more than MSRP on the secondary market.

Meanwhile, I’ll do what millions of other Americans will do: “Fix it, wear it out, make do, or do without.”

The simple fact is that vehicle supplies, maintenance, and equipment will remain in high demand, making auto sales a bull market in and of itself.

We favor AutoZone Inc. (AZO) as a method to capitalize on the issues that automakers (and their customers) are facing. We believe that buying AZO on the dips is profitable until automaker supply constraints ease.

Don’t be put off by the company’s expensive price; you can acquire partial shares and still profit when the stock rises.

The Charles Schwab Corp.

Are you aware that your broker earns money from you through methods other than commissions?

They aren’t always upfront about the profits they make off of you, but in most situations, these profits are linked to interest rates.

As interest rates rise, net margins expand, sending earnings higher.

Payment for order volume, margin interest, and share lending are some of the ways that brokerages like Robinhood Markets Inc. (HOOD) can stay in business despite not collecting commissions.

If you have a margin account, for example, your broker can “borrow” your shares and lend them to short-sellers.

They do not pay you for this access, but they do charge interest on the margin used by the short seller to hold their position.

The greater the rise in interest rates, the greater the profit margin for brokers.

While all of these income strategies are detrimental to a broker’s consumers, they are beneficial to the broker’s stockholders.

We favor Charles Schwab Corp. (SCHW) in that sector. It may look like a dog right now, but that is usual in downturn markets.

If interest rates continue high and market circumstances stabilize (or, dare we hope, improve…), SCHW should rise dramatically. Schwab has been accumulating customers through acquisitions, giving them the scale to increase their earnings once the market settles and trading balances rise again.

SCHW has decreased somewhat year to date, but this positions it at a more cheap discount right now.

Costco Wholesale Corp.

A rising dollar is a major issue for large corporations, particularly technology firms because profits earned outside the United States are transformed back into fewer, stronger dollars.

However, what if a major portion of your revenue is derived from imported goods that are less expensive in stronger dollar terms?

We still prefer the discount-retail space because of the strong dollar. We believe that consumer spending concerns have been exaggerated.

As long as hiring stays healthy, spending should climb, putting retail enterprises in a good position to benefit from a high dollar.

The fundamentals of Costco Wholesale Corp. (COST) appear to be sound, and the concerns about pinching margins should be mitigated in the short run by the company’s benefits from a high dollar.

We believe that purchasing this deeply discounted deep-discount on the dips makes sense.

Starbucks Corp.

Retail services stocks are not immune to inflationary pressures, but some companies have devised tactics to combat it.

Starbucks, for example, routinely contends with inflation-deflation cycles in their raw supplies (coffee beans). Coffee prices increased 100% from the bottom of the pandemic bear market to the crest at the end of 2021, while Starbucks Corp. (SBUX) shares increased 89%.

Starbucks is currently approaching its peak from earlier this year, but it’s still roughly 8% cheaper – making now a fantastic time to buy shares.

SBUX must deal with general inflation rather than merely rising coffee prices.

However, the point is that the corporation is already adept at maintaining pricing stability. As a result, we expect SBUX to continue above its lows and recover in the short run as long as consumer spending stays healthy.

Waste Management Inc.

In a volatile market, it usually makes sense to concentrate on defensive, dividend-paying equities.

That is still true today, but when interest rates and inflation rise, typical dividend schemes are less effective.

When interest rates rise, future dividends lose value because the present value of those income streams decreases.

However, if a corporation has a defensible near-monopoly on its client base, favorable margin trends, and a history of raising dividends above inflation rates, the traditional principles may still apply in an inflationary market.

Waste Management is precisely such a type of business.

Waste Management’s (WM) attempts to extract energy and byproducts from garbage collection and landfills are just two instances of how the company is trying to boost cash flows in order to maintain a high dividend payment ratio and yield above inflation.

We expect value investors will flood into the company’s shares in the short run as the pool of dividend stocks diminishes.

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