Walmart, Uber, O'Reilly make MKM's top stocks list for 2023
Matteo Colombo
MKM Partners has named its top eight stock picks for 2023, a list that includes Walmart (WMT), Uber (UBER) and O'Reilly Auto Parts (ORLY).
The research firm's other picks were World Wrestling Entertainment (WWE), Talos Energy (TALO), Arch Capital (ACGL), Palo Alto Networks (PANW) and LKQ (LKQ). MKM said that it saw the stocks falling into three groups: relative value on a historical basis, momentum and defensive plays.
For value on a historical basis, MKM chose PANW, UBER and TALO. The firm's momentum picks were ORLY, ACGL and WWE, while its defensive choices were WMT and LKQ.
MKM said that it sees the stocks as offering a possible upside of around 10% to 60%, based on levels as of Dec. 8. It noted that its 2022 pick list generated a non-weighted return of -1.94% compared with -17.5% for the S&P 500 (SPY). The firm's 2021 list saw a non-weighted return of 16.7% versus a gain of 23.4% for the S&P 500.
The research group said it sees increased market volatility for the first half of 2023, followed by a calmer second half, particularly after the market bottoms. It added that it favors using options for positioning, "especially defined-risk strategies headed into a possible recession."
For another look at where the market is headed in 2023, check out SA contributor Wright Research's "S&P 500 2023: A Mixture of the early 2000s and 1980s?"