With three weeks left until the end of this year 2022, the uncertainty experienced by the stock investment sector is still present. The main economies continue to show no certain signs of an upcoming recovery. Furthermore, with widespread fear about a possible recession it ends up making it difficult for us to choose where to position our capital for the next year. So today we are going to give you 4 stock investment ideas to position your portfolio for the start of 2023.
Idea #1: Energy sector stocks.⚡
As we have seen throughout this year 2022, investment in energy stocks They will benefit from the transition to lower-carbon energy sources, such as coal. These include energy companies in natural gas pipelines and energy storage facilities (companies that help transport resources), as well as renewable energy companies.
Many of these companies are trading at a discount to the US stock investment market in general (based on valuation metrics such as the P/E ratio) and offer us growth in line with the market in general, but with greater stability (given that the energy is quite essential) and pay good dividends.
What ETFs do we have to gain exposure to this idea?
To take advantage of investing in energy sector stocks in a diversified way, we have several options. The MLP & Energy Infrastructure ETF (MLPX) or the L&G US Energy Infrastructure MLP UCITS ETF (XMLP) offer us broad access to a basket of stocks that are part of the US energy infrastructure sector. Instead, to gain exposure to renewable energy, we can invest in the iShares Global Clean Energy UCITS ETF (ICLN).
Idea #2: European and Japanese stocks.️
The slow pace of interest rate rises in major developed markets and the possible rebound in China's economic growth next year could be a recipe for investing in non-US stocks to offer good returns, especially in the old continent (Europe) and in Japan. In particular, we recommend exposure to investment in stocks in the industrial sector, raw materials, copper and oil.
What ETFs do we have to gain exposure to this idea?
To take advantage of investing in shares of this idea in a diversified way, we have several options. For the Japanese country, we can gain exposure through the iShares MSCI Japan ETF (EWJ) or the WisdomTree Japan Hedged Equity Fund (DXJ). Instead, to gain exposure to a diversified basket of European assets, we can invest in the Vanguard FTSE Europe ETF (VGK) or the WisdomTree Europe Hedged Equity Fund (HEDJ).
Idea #3: Emerging Markets Stocks.
Many emerging countries are “net exporters,” that is, they sell more goods abroad than they import. When the world economy does well, they do even better. But it is also because investors tend to flock to emerging economies in good times, seeking higher returns by investing in their economies, stock markets and currencies. To the extent that US dollar weakens, the fortunes of governments and companies in emerging countries improve.
That's because the money they owe is typically valued in dollars, meaning they can pay that money back (and fund future growth) at a discount. As we commented a few months ago in an article about the emerging markets, these economies will benefit exponentially from a prompt economic recovery.
What ETFs do we have to gain exposure to this idea?
To gain exposure to emerging markets, we can invest in the iShares MSCI Emerging Markets ETF (EEM) or the Vanguard FTSE Emerging Markets ETF (VWO). If we want to invest in a specific region, we have several options. For example, for Indonesia we can invest in the iShares MSCI Indonesia ETF (EIDO). For Brazil we have the iShares MSCI Brazil ETF (EWZ). Finally, for the Latin America region, we can gain exposure through the iShares MSCI EM Latin America UCITS ETF (LTAM).
Idea #4: US stocks.
The macroeconomic outlook for 2023 for investing in US stocks predicts a good future for them. Analysts and investors expect interest rates to peak in the first quarter of next year and, as investors begin to prepare for a further rate cut, the US dollar will fall against other currencies, which will will boost profits from investing in US stocks.
But not all American companies are the same; Looking ahead to next year we can once again see investment in growth stocks and stocks with good income grow. Specifically, the best companies are those that have plenty of cash to withstand the effects of an economic downturn and even higher interest rates.
What ETFs do we have to gain exposure to this idea?
To be able to take advantage of this idea of investing in US stocks in companies that meet the stated conditions (high growth and profits), we have few but good quality options. One of the best options is the iShares MSCI USA Quality Factor ETF (QUAL). As for stocks with good earnings, we have the S&P 500 Dividend Aristocrats ETF (NOBL) which gives us exposure to US companies that have grown their dividends for at least 25 consecutive years.