2023 could be another difficult year for stock markets. Things could be particularly bumpy on the FTSE 250 too, given the high number of companies with significant exposure to the UK.
But this isn’t damaging my appetite to buy UK shares. There are many top stocks I expect to trade strongly (and deliver strong shareholder returns), regardless of broader economic conditions.
Here are two I think could be great buys for new investors.
Property powerhouse
Buying dividend shares could be a good strategy to generate positive returns in 2023. The scope for share price gains could be limited if corporate profits flatline, or reverse. Owning income-paying stocks then could enable my wealth to keep growing.
Tritax EuroBox (LSE: EBOX) is a FTSE 250 income stock on my radar today. Recent share price weakness has driven its dividend yield to a whopping 7.3% for this financial year (to September 2023).
This business owns a variety of large warehouses and logistics hubs across parts of Europe. And it’s fallen in value on fears that a painful recession on the continent will hit demand for its properties. The company’s assets are spread across Germany, Belgium, Spain, Poland and the Netherlands.
But Tritax Eurobox has its tenants tied down on long contracts. Indeed the weighted average unexpired lease term across its portfolio stands at around eight-and-a-half years. So even if economic conditions are extremely difficult, rental income should remain stable.
City analysts expect annual earnings to grow in financial 2023. According to current forecasts, the bottom line will increase 21%. And what’s more, current estimates leave the business trading on a price-to-earnings growth (PEG) ratio of 0.5.
I expect Tritax EuroBox’s profits to keep rising strongly too. The three drivers of e-commerce, automation and reshoring should all supercharge demand for distribution and warehousing spaces over the next decade.
Solar powered
I think NextSolar Energy Fund (LSE: NESF) is another top buy for a starter portfolio.
This FTSE 250 company invests in solar farms, as the name implies. It holds stakes in 330 plants predominantly in Europe, but also in the US.
Buying energy producers has obvious benefits in tough times. Electricity demand remains broadly unchanged at all points of the economic cycle, meaning revenues at businesses like NextSolar usually remain stable.
The downside to owning renewable energy stocks is that keeping wind turbines and solar panels working can be expensive business. This can take a big bite out of earnings.
The upside however, is that green energy is an industry tipped for explosive growth over the next 30 years. So investing in companies like this today could generate significant long-term returns.
Yet today, NextSolar shares trade on a forward price-to-earnings (P/E) ratio of just 5.1 times. This, combined with huge 6.6% and 7.4% dividend yields for the next two years (to March 2023 and 2024 respectively), make this a great value stock for new investors.
