Investors are scurrying to find stocks to buy as the market stages a strong uptrend this year. Of course, people make money when prices go up. Yet these rebounding markets are potentially hazardous for investors because risky investments can rise alongside good companies. Buyers who pick up speculative investments could end up owning the worst stocks for when sentiment turns sour.
To avoid these risks, investors should carefully consider which companies can outperform the market as their profits grow. Cream-of-the-crop stocks have strong businesses that thrive and survive despite economic conditions.
Of course, investors will also want stocks to buy that trade at reasonable valuations. Names that trade at a discount are a bonus. Once the market recognizes a great business, its stock price can rise significantly.
What kinds of companies fit this profile? Consider drug makers with healthy product pipelines and tech companies that cut investments without hurting their product development.
For this list, here are seven stocks to consider from the sectors mentioned above and more. They all have strong quality and value traits as well as robust growth potential in 2023.
Apple (NASDAQ:AAPL) is the first name on this list of stocks to buy. The company offers investors the best of both worlds with both hardware and entertainment offerings.
As far as hardware goes, Apple just introduced a new Mac mini powered by M2 and M2 Pro processors. The Mac mini starts at just $799, a price range that allows the company to keep up with other PC suppliers. In addition to this, creative professionals can also buy the new, powerful Macbook Pro for more processing power in an aesthetic package.
Of course, worldwide PC shipments did decline 28.5% year-over-year (YOY) in the fourth quarter of 2022. But Apple’s impressive line-up should keep it competitive as the PC market adjusts to economic realities.
As for entertainment and home applications, Apple also recently announced its second generation HomePod. This product offers “breakthrough sound and intelligence” and robust smart home features. It can notify users about smoke and carbon monoxide alerts as well as read room temperatures and humidity via “smart home automations.”
Axcelis Technologies (ACLS)
Next up on this list of stocks to buy is Axcelis Technologies (NASDAQ:ACLS), a semiconductor equipment manufacturer.
On Jan. 10, Axcelis raised its Q4 and full-year 2022 guidance, increasing revenue expectations. In the release, CEO Mary Puma explained that the company benefited from “strong execution by Axcelis employees delivering higher than expected system shipments and aftermarket revenue.” Investors can infer that the company’s business momentum may accelerate from here.
Axcelis’ Purion family of products is a growth driver in particular. These ion implanters “meet the challenges of fab processes” at 10 nanometers (nm) or less. Per the company, “the Purion platform is designed with unique enabling technologies to deliver the highest purity, precision and productivity—and the lowest cost of ownership.” Corporate customers invest more in solutions that cut costs.
ACLS currently has a trailing price-to-earnings (P/E) ratio of around 21 times. ACLS stock also has strong growth and quality traits with increased profit potential when improvements in freight and improved pricing on materials kick in.
Pfizer (NYSE:PFE) is an even cheaper stock to buy today after falling to the $45 level this week. PFE stock peaked at around $56 last year before profit takers rotated out of drug stocks.
Shareholders who sold are missing out, however. Pfizer is supplying its Covid-19 drug to China in limited quantities for now. But CEO Albert Bourla recently said the company is not in discussions to license the drug in the country. By negotiating a price for the branded product in China instead, Pfizer’s Paxlovid drug should continue to bolster company profits.
Bourla said Pfizer’s 19 products set to launch in the next year and a half are another reason to be upbeat. “I thoroughly believe the best days are ahead,” the CEO commented. Sales of these new products should accelerate revenue growth. That’s just another reason to consider PFE as one of the stocks to buy.
Stellantis (NYSE:STLA) showed off its ambitions in the electric vehicle (EV) space when it unveiled its Dodge Ram 1500 Revolution battery electric vehicle (BEV) concept at Las Vegas’ CES event this year. That unveiling is sure to be a defining moment for the automotive firm.
The Ram 1500 BEV gives investors a clear direction on the company’s road map. Stellantis is making its mark on the truck segment with this concept vehicle, demonstrating a willingness to offer customers advanced tech and transform the driver experience. The vehicle will have “a fully connected customer experience and advanced mobility features,” an “ultra-modern exterior design” and more.
On Jan. 9, Stellantis secured a supply agreement for manganese sulphate. The five-year deal will give the company 45 kilotons of material for EV battery production starting in 2026. EV firms need supply deals like this to produce vehicles and meet customer demand, so the agreement is a big step forward for Stellantis.
Right now, STLA stock trades at a P/E of 2.9 times. If the company can report better operating earnings and growing free cash flow down the line, shares could rise from here.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) manufactures advanced semiconductors. In Q4 2022, the company grew revenue by 2% sequentially. TSM stock is a buy as customer demand recovers, especially for advanced 5-nanometer semiconductor solutions.
Recently, Taiwan Semiconductor said that its depreciation expense would increase by 30% YOY in 2023 as the company works to offer 3-nanometer technologies. According to the company, this tech is the “most advanced semiconductor technology in both PPA and transistor technology.” As a result, TSMC foresees “strong demand in 2023, 2024, 2025 and beyond.”
TSMC is also expanding its capacity outside of Taiwan to provide optimal solutions for customers and improve its ecosystem. By opening new fabs in the U.S. and Japan, the company will grow its global capacity in the next few years.
All in all, TSMC does not appear to be slowing down its research, development and expansion efforts. The semiconductors that the company produces are essential to modern daily life, making TSM stock one of the cream-of-the-crop stocks to buy.
Teck Resources (TECK)
Teck Resources (NYSE:TECK) will benefit from strong copper, zinc and steel-making coal demand in 2023, especially as China reopens. The company is well positioned in the industry to capitalize on revenue growth.
Last year, Teck launched an initiative to realize value from its zinc development assets. Through Zinc Satellite, the company leverages its technical and commercial expertise in five projects spanning across Alaska, Canada and Australia. Although some emerging miners operate in at-times politically turbulent locations, these five projects are all located in stable areas.
Currently, TECK stock is inexpensive at a P/E of around 7 times. It has a low debt/equity ratio as well. With such a healthy balance sheet, the company may return cash flow to shareholders. Teck could reinvest in the business, buy back shares or issue a special dividend.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is a biopharma firm offering a triple-combination therapy with blockbuster sales potential. VRTX stock is a buy especially before the company brings its new drug to market.
Investors should expect strong growth in Vertex’s vanzacaftor triple-combination therapy for cystic fibrosis. The company plans to complete its Phase 3 studies of the treatment by the end of 2023. Biotech stocks typically rally when a given company announces positive results.
Looking forward, Vertex has high expectations for its drug. It has also “already identified additional potentiators and correctors in the lab” and is “advancing them into the clinic.” Lastly, the company is developing an “mRNA approach” for cystic fibrosis patients “who cannot benefit from CFTR modulators.”
Vertex is creating value by developing transformative medicines for serious diseases. In the past, investors have gotten strong returns from Vertex as well; the company conducted a $1.5 billion buyback in 2021. If the company can bring its new drugs in development to market, VRTX stock could be a big winner.
On the date of publication, Chris Lau did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.