In this article, we discuss Jim Cramer’s 10 S&P 500 stock picks for 2023. If you want to see more stocks in this selection, check out Jim Cramer’s 5 S&P 500 Stock Picks for 2023.
The S&P 500 was under immense pressure in 2022, going down by 19.4% as most of its listings crumbled amid the push by the Federal Reserve to hike interest rates. Inflation near record highs meant few investors had the stomach to take up risk in the equity markets, all but fueling the selloff. Recession fears and the Russian-Ukraine war all but accelerated the selloff spree. Amid the bearish sentiments in the market, CNBC’s Jim Cramer was overly concerned over whether the market will bounce back amid the steep selloff.
The Federal Reserve embarking on an aggressive monetary tightening spree in the race to clamp down on inflationary pressures that were getting out of hand spelled more trouble, according to Cramer. Amid the interest hiking spree, the CNBC commentator warned of the potential recession risk that could significantly affect investors’ sentiments.
The warnings did not come as a surprise as Cramer tends to be bearish on the market and its prospects regardless of the ongoings. While he has been a staple of the financial news industry for decades, Cramer sometimes gets things wrong, which has seen him become the laughingstock of Wall Street. Given that his predictions are often controversial, with a portion of them turning out wrong, some investors often shun them or opt to do the opposite of what he does.
The fact that some of Cramer’s predictions rarely come to fruition has led to the creation of a Twitter account called Inverse Jim Cramer. The account is best known for taking the opposite position on Cramer’s financial decisions about the stock market.
Chevron was one of Cramer’s top picks at the start of the year. He insisted it was becoming cheaper and cheaper as it went down. The CNBC Mad Money host reiterated that the stock would be a winner as long as oil prices stayed above the $60-a barrel level. However, that has not been the case, as the stock has already lost more than 9% in market value and remains under pressure.
One prediction that Cramer might want to forget sooner than later is that of Silicon Valley bank parent company SVB Financials. While making the prediction, the CNBC commentator reiterated that it will be one of the biggest winners of 2023 alongside other blue-chip stocks like Tesla and Meta.
“This company is a merchant bank with a deposit base that Wall Street has mistakenly been concerned by,” Cramer said in the clip.
That prediction came to bite as Silicon Valley Bank went under at the height of the banking crisis that I regional banks.
Nevertheless, Cramer is sometimes wrong, and whenever he gets it right, there is always something to smile about. Despite getting it wrong with Chevron and SVB Financials, Cramer also reiterated that Netflix, Inc. (NASDAQ:NFLX), Meta Platforms, Inc. (NASDAQ:META), and Advanced Micro Devices, Inc. (NASDAQ:AMD) as some of the best stocks to consider in 2023. True to his predictions, the stocks have lived up to expectations and emerged as key drivers of the overall bull market.
Even though the overall market is trading well above its recent lows, plenty of stocks are trading less than they were a year ago. Some of these stocks boast impressive risk-reward given the tremendous upside potential. As valuation concerns become a big issue after the massive rally year to date, CNBCs Cramer believes there are stocks likely to fair well even on the economy plunging into recession.
Our Methodology
The list of Jim Cramer’s 10 S&P 500 stock picks for 2023 takes into considerations stock picks that the CNBC’s commentator predicted will outperform the market in 2023 at the start of the year. He chose five stocks from each of the groups of the highest and lowest performers in the S&P 500 in 2022 that might be winners in 2023.
While some of the stocks have lived up to expectations and rallied significantly others have been a big disappointment. We ranked the stocks based on their gains from when Cramer made his predictions. Overall, an equal weighted portfolio of these 10 stocks returned nearly 25% year-to-date and outperformed the S&P 500 Index.
10. V.F. Corporation (NYSE:VFC)
Upside Potential: 21.30%
Gain since Cramer Prediction: -29%
Price to earnings multiple: 9
V.F. Corporation (NYSE:VFC) is a big miss in Cramer’s predictions. The CNBC commentator expected the company to bounce back while betting that the new interim CEO Benno Dorer will help reinvigorate the company’s fortunes. However that has not been the case as the stock is down by 29% year to date.
V.F. Corporation (NYSE:VFC)’s growth metrics have mostly been cut short by inflation and other macro headwinds. Intermittent lockdowns in China last year and currency headwinds have also affected its revenue base. Consequently, the stock is down by about 29% year to date.
Consequently, V.F. Corporation (NYSE:VFC) is trading with a price-to-earnings multiple of 9 compared to 26 for the S&P 500. In addition, analysts on Wall Street have a $23.86 price target on the stock implying a 21.30% upside potential.
9. Enphase Energy, Inc. (NASDAQ:ENPH)
Upside Potential: 38.98%
Gain since Cramer Prediction: -23%
Price to earnings multiple: 34
Enphase Energy, Inc. (NASDAQ:ENPH) has been a big disappointment as it is down by about 23% year to date. The underperformance comes against the backdrop of Cramer terming the energy company a renewable golden boy at the beginning of the year.
The company designs, develop, manufactures, and sells home energy solution for the solar photovoltaic industry. While it has underperformed the overall market, Cramer believes the company remains well positioned to benefit from the clean energy push in the US.
The company delivered impressive Q2 results with revenues increasing 34.1% to $711.1 million despite missing estimates of $727 million. The bottom line increased 37.4% to $1.47 a share beating consensus estimates of $1.27 a share.
The stock trades at a premium with a price-to-earnings multiple of 34 compared to an average of 26 for S&P 500. The average price target on the stock is $240.94, implying a 38.94% upside potential from current levels.
8. Northrop Grumman Corporation (NYSE:NOC)
Upside Potential: 11.90%
Gain since Cramer Prediction: -13%
Price to earnings multiple: 20
Cramer believes Northrop Grumman Corporation (NYSE:NOC) is one of the best defense contractors as the Russia-Ukraine war persists. The company operates as an aerospace and defense company providing aircraft systems workwise. It delivered impressive Q1 results with earnings of $5.50 a share against $5.09 a share expected on revenues of $9.3 billion against the $9.2 billion that Wall Street expected.
Early in the year Cramer touted Northrop Grumman Corp (NYSE:NOC) as one of the best defense contractors as the Russia-Ukraine war persists. However, that has not been the case as the stock has underperformed going by the 13% decline year to date.
While Northrop Grumman Corporation (NYSE:NOC) has been under pressure going down by 13% year to date, it’s been under consolidation in recent months. Likewise, it trades at a discount with a price-to-earnings multiple of 20 compared to 26 for the S&P 500. The average price target on the stock is $511.55, repressing an 11.90% upside potential from current levels.
7. Halliburton Company (NYSE:HAL)
Upside Potential: 19.08%
Gain since Cramer Prediction: 1.03%
Price to earnings multiple: 12
At the start of the year Cramer predicted Halliburton Company (NYSE:HAL) will have a multiyear rally. However that has not been the case as it is only up by about 1% year to date compared to an 18% gain for the S&P 500.
Nevertheless, the company’s sentiments have improved significantly, going by the 35% rally over the past two months. The rally has come at the back of an uptick in energy prices.
Expectations that oil prices will find support above the $80 a barrel level strengthens the oil field services company’s outlook. The provider of products and services for the energy industry is likely to benefit from the booming energy industry by year-end.
Halliburton Company (NYSE:HAL) already exhibits strong financial metrics with earnings per share of $2.16, operating margin of 16.21%, and return on invested capital of 15.61%. While trading at a price-to-earnings multiple of 12, Haliburton boasts of a solid 1.67% dividend yield
Cramer predicts that Halliburton Company (NYSE:HAL) has a multiyear rally ahead as the average price target is $45.50, implying a 19.08% upside potential from current levels.
6. McKesson Corporation (NYSE:MCK)
Upside Potential: 11.69%
Gain since Cramer Prediction: 7.4%
Price to earnings multiple: 15
McKesson Corporation (NYSE:MCK) is one stock that Cramer believes will do well even with the economy slowing down amid recession fears. However that has not been the case as the stock has underperformed on the overall market turning bullish. Its 7% gain is an understatement going by the 18% gain for the S&P 500 over the same period.
McKesson Corporation (NYSE:MCK) is already up by about 7% but boasts tremendous upside potential owing to its low valuation and long-term growth potential. Over the past three years, it has delivered over 400% return. It’s fresh from increasing its dividend by 15%, affirming its ability to generate strong cash flows.
The stock trades at a discount with a price-to-earnings multiple of 15, backed with a 0.60% dividend yield. With an average price target of $451, McKesson Corporation (NYSE:MCK) has an 11.69% upside potential from current levels.
Click to continue reading and see Jim Cramer’s 5 S&P 500 Stock Picks for 2023.
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Disclosure: None. Jim Cramer’s 10 S&P 500 Stock Picks for 2023 is originally published on Insider Monkey.
