Jim Cramer’s 5 S&P 500 Stock Picks for 2023

In this article, we discuss Jim Cramer’s 5 S&P 500 stock picks for 2023. If you want to see more stocks in this selection, check out Jim Cramer’s 10 S&P 500 Stock Picks for 2023.

5. Constellation Energy Corporation (NASDAQ:CEG)

Upside Potential: 3.76%
Gain since Cramer Prediction: 18%
Price to earnings multiple: 24

Constellation Energy Corp (NASDAQ:CEG) has gained nearly 18% year to date living up to Cramer’s initial prediction that it will benefit from the Inflation Reduction Act. While the company generates and sells electricity in the US, it should benefit from increased incentives and investments toward a clean energy economy as one of the best operators of nuclear plants.

The company also stands out for having too much capital, which has seen it resort to returning value to shareholders through stock buybacks and dividends. Early in the year, the company announced it had about $2 billion of unallocated capital that it planned to use to buy back stock.

Its stock trades with a price-to-earnings multiple of 24 while offering an enticing 1.16% dividend yield. Analysts on Wall Street have an average price target of $101, implying a 3.76% upside potential.

4. Stanley Black & Decker, Inc. (NYSE:SWK)

Upside Potential: 13%
Gain since Cramer Prediction: 27%
Price to earnings multiple: 104

Investors who heed Cramer advice and added small positions on Stanley Black & Decker Inc. (NYSE:SWK) from the start of the year have been rewarded immensely. Shares of the tools and industrial products company have been on the move over the past two months on management announcing a new restructuring drive and cost-cutting plans.  The stock rallying 27% year to date has all but vindicated the CNBC commentator.

Stanley Black & Decker, Inc. (NYSE:SWK) plans inventory reduction that should result in run-rate savings of $2 billion by 2025. Wall Street is optimistic about the cost-cutting and restructuring plans that lead to significant earnings and cash flow growth.

Cramer believes investors should start a small position on Stanley Black & Decker, Inc. (NYSE:SWK) and gradually buy more. The company trades with a price-to-earnings multiple of 104 with a high price target of $110, implying a 13% upside potential.

3. Netflix, Inc. (NASDAQ:NFLX)

Upside Potential: 10.34%
Gain since Cramer Prediction: 43%
Price to earnings multiple: 35

Netflix, Inc (NASDAQ:NFLX) has been in fine form ever since Cramer reiterated early in the year that it has turned itself around. A 43% year-to-date gain attests to the impressive run as the company continues to affirm its status as a streaming giant. Likewise, Cramer believes the streaming giant has what it takes to generate significant value in 2023.

The company delivered solid second-quarter earnings with revenues of $8.2 billion against the $8.3 billion expected and earnings per share of $3.29 against the $2.86 a share analysts expected. Netflix, Inc (NASDAQ:NFLX) guiding for a significant acceleration in revenue in Q3 underscores underlying growth. The growth is mostly driven by growth in paid memberships due to the rollout of paid account sharing. Its advertising business is also growing at an impressive rate.

While the stock is trading at a premium with a price-to-earnings multiple of 35, Wall Street has an average price target of $466.39, implying a 10.34% upside potential.

2. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Upside Potential: 24.79%
Gain since Cramer Prediction: 77%
Price to earnings multiple: 38

Advanced Micro Devices, Inc. (NASDAQ:AMD) is another stock that has lived up to Cramer’s prediction going by the 77% gain year to date. Wary of the company’s slowing personal computer, Cramer reiterated his confidence on CEO Lisa Su and the business model. The company has seen its fortunes improve significantly owing to the growing demand for chips to enable the AI revolution.

While Nvidia has had a head start on the segment, the market size means there is tremendous value to unlock. Microsoft has already partnered with the chip giant to enhance AI chip expansion. Advanced Micro Devices, Inc. (NASDAQ:AMD) has also launched its most powerful GPU to date to rival Nvidia.

While Advanced Micro Devices, Inc. (NASDAQ:AMD) is up by about 77% year to date, it trades with a price-to-earnings multiple of 38. It also commands an average price target of $137.38, implying a 24.79% upside potential.

1. Meta Platforms, Inc. (NASDAQ:META)

Upside Potential: 11.05%
Gain since Cramer Prediction: 140%
Price to earnings multiple: 24

Meta Platforms, Inc. (NASDAQ:META) has been one of the key drivers pushing the S&P 500 higher after a 140% year-to-date gain. Cramer had predicted that the company will benefit on directing its Metaverse budget to other high growth areas.  That has been the case as the company has put aside its metaverse plans opting to join the artificial intelligence spree and focus on enhancing efficiency. Efforts by CEO Mark Zuckerberg to focus on efficiency through slashing costs are already bearing fruits going by its profitability metrics.

Likewise, earnings have improved significantly, with the company delivering $32 billion in revenue in Q2 against the $31.06 billion expected. Earnings totaled $2.98 a share against the $2.92 a share expected. Average monthly users on its networking apps have been trending up. The launch of Threads, a text-based social network to rival Twitter, has also strengthened its outlook.

Despite the impressive run, Meta Platforms, Inc. (NASDAQ:META) trades with a price-to-earnings multiple of 24 with an average price target of $331.57, implying an 11.05% upside potential from current levels.

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