As you near the end of 2022 -- a year defined by high inflation and a humbling bear market -- it's never too early to think about ways to set yourself up for success in 2023 and beyond. Great stocks can help you invest better and give you the confidence you need to reach your financial goals. Here are a couple of candidates to consider that have long histories of strong performance and bright futures ahead.
American Express
American Express (AXP 0.09%) may lag behind competitors Visa and Mastercard when it comes to merchant network size, but it manages to make almost as much revenue as the two companies combined. This is largely because AmEx issues its own cards as well as processes transactions -- Visa and Mastercard only process transactions. AmEx's multiple revenue streams have been paying off, with the company bringing in over $13.5 billion in revenue in the third quarter (up 24% year over year).
Data by YCharts
With inflation at current levels, consumers have been more reliant on their credit cards. So much so that this year household debt increased at its fastest pace in 15 years. In the third quarter alone, credit card debt collectively rose more than 15% from the same period in 2021 -- the largest jump in more than two decades. This isn't good news for consumers, but AmEx has surely been reaping the benefits.
With the potential for a looming recession, consumers will likely have to lean more on their credit cards, and AmEx will undoubtedly be a popular go-to choice. In Q3, the company added 3.3 million new cardholders, but what's most impressive is that millennials and Gen Z customers accounted for more than 60% of them. They're the company's fastest-growing demographic.
Even once economic conditions improve and the dust settles, AmEx will be in a good position. It's locking in younger consumers who love the perks of being an AmEx customer and will likely stick with the company for the long haul. AmEx ranked first among national credit card issuers in the J.D. Power 2022 U.S. Credit Card Satisfaction Study. At current price levels, the long-term potential of AmEx may be too good not to take advantage of.
AT&T
Any company around long enough will eventually make a business decision it wishes it could take back. Not as many companies will make as expensive a misstep as AT&T (T -0.43%) did by trying to buy its way into the entertainment and media industry and essentially deprioritizing its core telecom business. AT&T took on a lot of debt for those ambitious plans, and it's weighed the stock down for the better part of a decade.
That should all change now that AT&T has tossed in the towel and spun off its WarnerMedia business to refocus on its core telecom business. In the short term, the $43 billion deal helped AT&T pay down some of its debt (although there's still a lot left with over $133 billion in long-term debt). In the long term, investors should feel relief that AT&T is getting back to its bread and butter. And so far, this refocusing has paid off.
Data by YCharts
Through the first three quarters of 2022, the company added 2.2 million new postpaid phone customers. For perspective, Verizon Communications, the second-largest carrier in the U.S., lost postpaid phone customers for the third consecutive quarter. AT&T's wireless revenue also grew 5.6% year over year, its biggest increase in over a decade. AT&T is trending in the right direction.
It also helps that AT&T's price-to-earnings (P/E) ratio -- which tells you how much you're paying for $1 of a company's earnings -- of 7 is almost half of its median over the past decade. If time is on your side, AT&T's stock looks like a buy heading into 2023, especially considering the telecom industry is one of the more recession-resistant industries out there.
