Investing is ultimately about making money. If your investments don't make money for you, they're useless. And the more money they generate, the more money you're likely to make.
It stands to reason, therefore, that some of the best investment ideas are ones that already generate boatloads of cash. With this in mind, here are three stocks to buy for 2023 that are practically money machines.
1. Alphabet
Alphabet (GOOG +0.98%) (GOOGL +1.11%) should report 2022 revenue in the ballpark of $280 billion, with its Google Search product leading the way. That revenue will probably translate to profits of close to $70 billion, a total that's greater than the market caps of nearly 80% of the companies in the S&P 500.
With those kinds of huge numbers, it's not surprising that Alphabet has amassed a ginormous cash stockpile. The company's cash, cash equivalents, and marketable securities topped $116 billion as of Sept. 30, 2022.
NASDAQ: GOOGL
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Investors seemingly don't care about Alphabet's impressive financial strength. The stock plunged 40% in 2022. There are worries about slowing growth and rising competition (including from TikTok and OpenAI's ChatGPT chatbot).
However, Alphabet stock has never been this cheap, relative to its projected cash flow, and the company's ability to generate cash flow remains strong. I think Alphabet is a no-brainer money machine to buy for the new year.
2. Chevron
Wall Street analysts expect that Chevron (CVX +0.00%) will report 2022 revenue of close to $238 billion. It's likely that the oil-and-gas giant's profits will amount to roughly $38 billion of that total.
Chevron uses much of its cash flow to reward investors with an attractive dividend and share repurchases, and to invest in new projects. Therefore, the company's cash stockpile isn't as large as it would otherwise be. However, Chevron still has a lot of cash on hand, with cash, cash equivalents, and marketable securities totaling $15.4 billion as of Sept. 30, 2022.
NYSE: CVX
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2022 was a banner year for most oil stocks, and Chevron was no exception, as its share price skyrocketed more than 50%. And this followed a 39% gain in 2021.
Can Chevron keep the momentum going in 2023? I think so. Some industry experts predict a bull market for oil in the new year. If they're right (and I suspect they will be), Chevron should be among the big winners.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 0.73%) doesn't claim the jaw-dropping numbers that Alphabet and Chevron do. However, the drugmaker is still a money machine, thanks to its monopoly in treating the underlying cause of rare genetic disease, cystic fibrosis (CF).
The company expects to post 2022 revenue of close to $8.9 billion. Vertex's profits should come in at around $3.5 billion. And its cash stockpile as of Sept. 30, 2022 of $9.8 billion is even greater than the sales total for last year.
Although 2022 wasn't a great year for many biotech stocks, Vertex delivered a gain of more than 30%. Investors liked the company's strong, sustained revenue and earnings growth. Perhaps even more importantly, they were bullish about Vertex's pipeline prospects. There's a good reason for this optimism.
Vertex and its partner, CRISPR Therapeutics, appear to be on track to win regulatory approvals in 2023 for exa-cel in treating sickle cell disease and beta-thalassemia. The gene-editing therapy could achieve peak annual sales of more than $2 billion if approved. With exa-cel likely on the way and several other promising late-stage candidates in its pipeline, Vertex should become an even bigger money machine in the future.
