I’m hoping that next year brings more positivity with it than 2022 has offered. The stock market as a whole hasn’t delivered me good returns, with the FTSE 100 only up marginally over the year. I do think that most of the gloomy outlook for the economy is factored into the current price of most stocks. So I think that there’s a greater chance of stocks rallying in 2023 given that we’re starting from a low bar. With that in mind, here are my best shares to buy for the coming year.
Aiming for a rebound
To make a play on better investor sentiment next year, I want to add growth stocks. I feel Wise (formerly TransferWise) is a good example. It rebranded to move away from just foreign currency payments to focus on a future where it can be a more rounded financial services company. I think FinTech is going to continue to disrupt traditional banks in years to come.
Aside from specific stocks, I also like investment trusts such as HarbourVest Global Private Equity and Templeton Emerging Markets. The private equity trust gives me access to early stage growth companies. The emeregng markets trust allows me to get exposure to high growth economies.
My best shares to buy from healthcare
A second area I like is healthcare. I think this sector holds up well in 2023 even if I didn’t have a strong bias on the economy. Demand for medicine will be there regardless of if we have a recession or a boom period.
As well as adding the two FTSE 100 giants GSK and AstraZeneca, I’m also going to add Spire Healthcare Group and Mediclinic International. This give me a broad exposure to the entire industry, from drug development through to the provision of private healthcare.
Having a spread of companies also helps with regards to geography. For example, GSK has global revenue sources with only some exposure to the UK. Yet Spire Healthcare is just a UK business. Having this mix means that I can take advantage if things go well at home next year. Yet it doesn’t leave me completely exposed if things go south.
Protecting myself
There’s a chance that my thinking for 2023 is wrong, of course. A tough recession here in the UK would mean several sectors experiencing much lower demand. This is particularly true in the consumer discretionary space.
To protect myself in this case, I’m adding to my list some defensive stocks mainly from manufacturing. This includes Rotork, Spectris and IMI.
For example, Rotork designs and manufactures instruments for use in industries such as oil, gas, water and power. It’s a robust business model. The components made are needed for various businesses. Therefore, I don’t see demand materially decreasing even if the UK economy performs worse than expected in 2023.
Bringing it all together
I don’t have the cash at the moment to buy all of these stocks. Yet I don’t feel this is a list that I have to buy today. If my thinking is correct, I can (and will) buy different ones over the course of the year and still benefit from performance going forward. After all, as a long-term investor, I’m going to be holding them for years to come.
