My 5 Highest Conviction Stocks to Buy in 2023

I like owning a lot of stocks.I may be too diversemy strategy of taking relatively small positions in many companies has allowed me to invest in some big winners that I probably would not have put in a concentrated portfolio. You can also grow your position steadily.

As we enter 2023, I am strongly convinced that: black stone (BX 3.43%), Brookfield Asset Management (Bam 0.88%), prologue, (PLD 3.37%), next generation energy (Hey you 1.23%)When Palo Alto Networks (PANW -0.19%) It can deliver market-beating returns over the next few years. So early in the new year he will be adding them to all five positions.

Huge War Chest to go shopping

Blackstone’s stock shattered in 2022, down about 40%. The biggest factor weighing heavily on the large alternative asset managers was the fear that they would struggle to grow in the current environment.

However, the company will enter 2023 in an excellent position. He has $182 billion in investor capital to deploy into new investment opportunities.

With stock prices falling and credit costs rising, there should be plenty of attractive investment opportunities in Blackstone. This will allow us to continue to grow our fee-related and performance revenues in the future, and continue to pay an attractive dividend (Blackstone’s current yield is 6.5%).

Growth and Income at a Worthwhile Price

Brookfield Asset Management is another alternative asset manager with growth potential. its parent, Brookfield Corporation (BN 3.65%),completion Unique stock split at the end of last year Part of the asset management business will be split off and distributed to shareholders unlock the value of this business.

Brookfield Asset Management expects fee-related revenues to grow by 15% to 20% annually over the next few years by leveraging recent investor funding. This should allow the company to increase its dividend by a similar percentage with a yield above his 4%. This combination of attractive dividend income and earnings growth should provide investors with strong total returns over the next few years.

Built-in growth at scale

Prologis shares also plummeted last year, dropping nearly 30%. The sale comes amid concerns that demand for warehouse space is cooling.

However, the company has seen no evidence of a slowdown. Additionally, the long-term nature of leasing has not yet fully benefited from the recent surge in rental prices. As such, Prologis estimates that comparable store net operating income will grow at an annual rate of 8% to 10% over the next few years barring rent increases.

What’s more, the company recently completed an additional acquisition of Duke Realty and has a multi-billion dollar development project under construction. These catalysts should allow the company to continue to grow its earnings and dividends at an above-average pace over the next few years.

Ahead of strong growth

The US needs to invest $4 trillion to decarbonize the economy over the next 30 years. This represents a tremendous commercial opportunity. NextEra Energy is one of the companies at the forefront to take advantage of this situation.

The company is currently investing $85 billion to $95 billion to decarbonize and modernize Florida’s utilities, as well as Renewable energy Increase capacity and expand the country’s natural gas and power infrastructure. These investments should support his earnings-per-share growth of 10% annually, at the high end of NextEra’s outlook through at least 2025.

This will allow the company to increase its 2%-yielding dividend by about 10% each year through 2024. The combination of earnings and dividend growth should enable NextEra to generate strong total returns.

Take advantage of the need for enhanced cybersecurity

cyber security This is another megatrend that should deliver strong returns to investors in the years to come. Cyber ​​threats are becoming more complex and costly, prompting more companies to step up their security. As a cybersecurity leader, Palo Alto Networks must continue to benefit from this trend.

The company expects revenue to grow 25% to 26% this year, driven in part by 40% to 43% growth in its next-generation security solutions platform. Meanwhile, expanding margins should drive strong earnings growth and strong free cash flow.

The ability to generate surplus funds is a competitive advantage in this market. This should allow Palo Alto Networks to continue to invest in innovation and acquisitions to gain more market share.

Positioned for growth beyond 2023

Of all the stocks I own, I believe Blackstone, Brookfield Asset Management, Prologis, NextEra Energy, and Palo Alto Networks will provide above-market returns over the next few years. As such, we plan to add the respective positions early this year. Their stock prices may continue to fluctuate in the short term, but we’re happy to add to these high-conviction stocks in the future.

Matthew DiLallo has held positions at Blackstone, Brookfield Asset Management, Brookfield Corporation, NextEra Energy, Palo Alto Networks, and Prologis. The Motley Fool has positions in and recommends Blackstone, Brookfield Asset Management, Brookfield Corporation, NextEra He Energy, Palo He Alto He Networks, and Prologis. The Motley Fool recommends Brookfield stock. The Motley Fool’s U.S. headquarters has a disclosure policy.

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