On Dec. 5, U.S. stocks were dragged down in part by renewed bearishness on the part of Morgan Stanley (NYSE:MS) analyst Mike Wilson. However, with the U.S. services sector, the job market, and consumer spending holding up quite well, it’s difficult for me to imagine how the profit collapse predicted by Wilson could materialize. Actually, it’s hard to believe that the earnings of many companies won’t be stronger than expected. Especially if oil prices stay at their current, low levels and overall inflation continues to retreat. Given these points, I think that investors should use the latest decline as an opportunity to buy a number of the best Nasdaq stock picks for 2023 that I will list below.
In addition, I’d take Wilson’s warning with a grain of salt. In June, Wilson suggested that U.S. earnings would plunge. Also worth noting is that, in late June 2022, Wilson suggested that U.S. earnings would plunge, noting, “We see a pretty poor risk reward over the next 3-6 months with recession risk rising in the face of very stubborn inflation readings.” However, U.S. earnings haven’t plunged, and nearly six months later, the S&P 500 has risen 6% above its late June levels, even after yesterday’s slump that was partially induced by Wilson himself. (As of the morning of Dec. 1, the index had jumped nearly 9% above its late June levels). So contrary to popular belief, Wilson’s predictions have been far from perfect this year.
Again, I’d use the latest pullback as an opportunity to pick up some of the best NASDAQ stock picks for 2023.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
TSLA
Tesla
$176.68
PLUG
Plug Power
$13.86
ICAD
iCAD
$1.71
SHLS
Shoals Technologies
$24.47
EXPE
Expedia
$96.24
UAL
United Airlines
$45.42
WDAY
Workday
$160.88
Tesla (TSLA)
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Tesla (TSLA stock) Motors store in Piazza Gae Aulenti square in Milan, Italy
Source: Zigres / Shutterstock.com
Tesla’s (NASDAQ:TSLA) shares slumped on reports the company would reduce production of its Model Y EV by 20% at its Shanghai plant from Nov.
However, Tesla forcefully denied the report. Even if the news is true, it doesn’t mean that the company’s overall sales growth is slowing. As Barron’s pointed out, Tesla could have decided to reduce production of its Model Y and increase production of one of its other EVs instead. Also possible is that Tesla decided to cut production in China and raise production at another one of its factories simultaneously. In my view, other news involving Tesla and TSLA stock is much more critical. Specifically, the forward price-earnings ratio of TSLA stock, which dropped to just 35.8. That’s very low for a company which is the runaway leader of a booming market.
Finally, Tesla recently made the first deliveries of its full-size truck, the Tesla Semi. Since the EV, according to TSLA, “has triple the power [of] any diesel truck on the road right now.” and can haul a full load 500 miles one one charge, I believe that it will become a major revenue generator for the automaker.
Plug Power (PLUG)
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Nasdaq in focus accompanied by a green arrow and the word "NYSE"
Source: Shutterstock
Plug Power (NASDAQ:PLUG) continues to make meaningful progress as it seeks to solidify its position as a leader in the green hydrogen revolution. As PLUG opens more of its green hydrogen factories, its margins are poised to meaningfully rise. That’s because the company can produce green hydrogen at its own plants at less cost. Also, the large tax credit for green hydrogen should also be a game changer for PLUG next year. As a result of these upcoming, positive catalysts, the company predicts that its 2023 revenue will come in at $1.4 billion.PLUG also expected to generate “breakeven operating margins” by the end of next year.
On other fronts, Plug Power’s joint venture with Renault, the giant European automaker, is expected to ramp up next year, as the venture is poised to produce and deliver 800 vans in 2023. Also noteworthy is that Plug Power’s partner, Airbus (OTC:EADSY), the huge European plane manufacturer, recently announced “that it is developing a hydrogen-powered fuel cell engine.” The company intends to begin conducting trials of the engine around 2025 , and the company plans to start building new aircraft that may utilize hydrogen in five to six years.
Consequently, within a year or two, it could become apparent that Airbus is going to buy a large amount of hydrogen from Plug Power. As a result, PLUG stock could very well get a huge boost between the end of 2023, sometime in 2024, or even sooner. As Plug’s potential comes into clearer view next year, PLUG stock should rise dramatically, making the shares one of the best Nasdaq stock picks for 2023.
iCAD (ICAD)
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Bright signs for Nasdaq (NDAQ) cover the Nasdaq building in Times Square.
Source: Shutterstock
A developer of artificial intelligence-driven products used to detect cancer, iCAD (NASDAQ:ICAD) recently announced that it had reached a deal with Alphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) Google Health. Under the agreement, Google Health’s AI will be incorporated “into iCAD’s portfolio of breast imaging AI solutions.”
The deal will constitute the introduction of Google’s breast imaging AI into clinical practice. Moreover, Google agreed to license its AI tevchnology to iCAD. Over the longer term, the deal should be a game changer for iCAD and ICAD stock. First, in the eyes of investors and potential customers, Alphabet’s decision to partner with iCAD should validate iCAD’s technology. Secondly, since Google Health is licensing its technology to iCAD, Alphabet should benefit financially from the proliferation of iCAD’s “breast AI technologies.” As a result, Alphabet is likely to use its huge sales force, gigantic network of contacts, and large amounts of money to boost the sales of iCAD’s tevhnologies.
Trading with a bargain-basement market capitalization of just $43.57 million and just 1.5x sales, iCAD stock does not appear to reflect any of these opportunities.
Shoals Technologies (SHLS)
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conceptual image of the word NASDAQ surrounded buy red stock chart action
Source: Shutterstock
A developer of components used in solar-energy projects, Shoals (NASDAQ:SHLS) should get a big lift from two recent decisions made by the Biden Administration. Specifically, the administration found that four Chinese solar panel makers did not seek to avoid tariffs by opening factories in nearby Asian countries. Also, in-line with my previous predictions, US Customs and Border Protection released a major proportion of the solar panels hat it had been impounding in response to the Uyghur Forced Labor Prevention Act. The panels were made by China’s JinkoSolar (NYSE:JKS).
Since the U.S. has been suffering from a shortage of solar panels, the moves by the administration should enable more large-scale solar projects to get underway in the country more quickly, reducing Shoals’ “backlog and awarded orders of $471.2 million” and boosting the company’s top and bottom lines. It’s probably not a coincidence that, since both of the Biden administration’s moves were reported on Dec. 2, SHLS stock has climbed nearly 10%. Finally, as I pointed out in a previous column, last quarter, Shoals’ “Revenue was up 52% year over year to $91 million,” and its “Gross margin expanded to 39.7%, up 330 basis points from a year ago, while adjusted earnings of 10 cents per share easily exceeded the 2 cents analysts were calling for.”
Expedia (EXPE)
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Expedia app logo on a smartphone screen
Source: NYC Russ / Shutterstock.com
Expedia (NASDAQ:EXPE) reported very impressive third-quarter results. From here, the company should continue to benefit from the very strong, pent-up demand for travel well into 2023. Moreover, the valuation of EXPE stock remains very attractive. In Q3, Expedia’s top line climbed 22% year-over-year to a record $3.62 billion, while its operating income, excluding certain items, surged 42% YOY to $747 million. Also, in the first nine months of 2022, Expedia’s free cash flow soared over 100% to $3.1 billion. And the company’s Q3 lodging bookings also set an all-time record last quarter.
Moreover, EXPE CEO Peter Kern reported that the company would resume buying back its stock which the company views as “highly undervalued.” In addition, Wells Fargo (NYSE:WFC) said EXPE’s Q3 results had been “solid,” adding that it is pleased with the company’s loyalty and investment efforts. the firm maintained an “overweight” rating on EXPE.
United Airlines (UAL)
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a jet takes off on a clear runway.
Source: m.photo / Shutterstock.com
United Airlines (NASDAQ:UAL) was named a top airline pick by Morgan Stanley, which tends to be one of the more bearish firms on the Street. Among the positive catalysts cited by Morgan Stanley analyst Ravi Shanker were a rebound in international travel and the new contract that United signed with its pilots. Shanker added that the airline’s, “Earnings recovery out of the pandemic has kept pace with, if not led, peers,” while widespread concerns about the company’s profitability have been laid to rest. “UAL seems on track to exceed its 2023 guidance and to hit its 2026 guide issued 18 months ago — something even the biggest UAL bulls may have considered difficult at the time.” In addition, analysts at Cowen also said the UAL stock is its top pick among airline stocks, citing the company’s high exposure to international flights.
Workday (WDAY)
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software stocks: Coding software developer work with augmented reality dashboard computer icons of scrum agile development and code fork and versioning with responsive cybersecurityMore
Source: Shutterstock
Workday (NASDAQ:WDAY) provides software that helps companies manage their human resources and financial applications.
The company reported very strong third-quarter results on Nov. 29. Its revenue jumped 20% year-over-year to $1.6 billion and came in slightly above analysts’ average estimate. More impressively, its operating cash flow increased to $409 million, up from $385 million during the same period a year earlier, while it generated earnings per share of 99 cents, well ahead of analysts’ average estimate of 84 cents. “We are well-positioned in this type of [macro] environment because our cloud finance and HR solutions are truly mission-critical. As our Q3 results showed, more and more organizations are selecting Workday as their trusted partner to help them successfully navigate today’s changing world,” Workday CEO Aneel Bhusri said during the company’s Q3 earnings call.
Further, the company announced a new, $500 million share buyback plan. In a note to investors, investment firm Monness, Crespi, Hardt wrote that the company has “a large market opportunity” and is carrying out its initiatives well. However, the firm kept a “neutral” rating on the shares, citing macro issues. But, as I indicated in my introduction, I believe that worries about the macro issues are overdone.
On the date of publication, Larry Ramer owned shares of SHLS,JKS,ICAD and PLUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.
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