All the major indexes fell at least 20% from their highs at one point in 2022. While no knows if 2023 will see the start of a new bull market, a team of Motley Fool contributors recently selected three of their top stocks that could be winners in the next bull market.

Here's why Alibaba Group (BABA 2.59%), Floor & Decor Holdings (FND 1.34%), and Target (TGT -0.36%) are good buys right now.

Don't miss this deep value

John Ballard (Alibaba): Alibaba is the leading e-commerce company in China. But the recent weakness in China's economy and the stock's subsequent decline give investors a once-in-a-decade opportunity to buy one of the most dominant tech companies in the world at a big discount.

Alibaba has been a tough one for investors to get a handle on. On top of weak revenue growth last year, investors had to handicap the odds of the stock getting delisted on U.S. exchanges. Both factors led to investors driving shares of this dominant franchise down to bargain bin levels. But with the economy starting to show signs of improving in China, and the regulatory headwinds clearing, investors have a green light to take a swing.

A weak economy in China driven by pandemic disruptions caused Alibaba's commerce revenue to fall slightly during 2021. The company's most recent earnings report noted continued weakness in January. However, management gave some good news, with business trends in the apparel, sports, and outdoors categories starting to pick up as COVID-19 cases declined in February. Management expects this recovery to continue in the near term, which is a catalyst.

Management also remains confident in the future growth of its cloud computing business, which reported a revenue increase of 5% year over year through the first nine months of the fiscal year. Growth in public cloud computing space grew at double-digit rates year over year. The cloud business would have posted higher growth overall if not for project delays due to the pandemic. 

Overall, the improving Chinese economy is a major catalyst for Alibaba. The stock trades at a low price-to-earnings ratio of under 12 based on this year's consensus analyst estimate, which makes Alibaba one of the best bargains of last year's bear market. 

Market tested and Buffett approved

Jennifer Saibil (Floor & Decor): One benefit from the bear market (and believe it or not there are several) is that investors are realizing that successful investing is less about finding exciting growth stocks and more about finding excellent businesses that can operate profitably and grow their revenue streams.

Floor & Decor owns hard flooring superstores throughout the country. It's a great example of a slow-and-steady business that's still posting double-digit growth in a pressured environment -- even if it's low-double-digit growth. 

Neither the pandemic nor inflation has been able to knock down its sales growth, although it has begun to decelerate. Sales increased 14.6% over last year in the 2022 fourth quarter to just over $1 billion. Net income continues to increase as well, growing 39% more than last year to $69 million.

Floor & Decor's growth strategy lies in opening new stores and improving customer engagement. It's still a fairly new company, with 60% of its stores less than five years old. That means existing stores still have their own opportunities to reach new customers and grow comparable-store sales. It ended 2022 with 191 warehouses after opening 32 in 2022, and it plans to open another 32 to 35 stores in 2023. Management believes it has room to reach 500 stores over the next 10 years. 

I would almost call this an under-the-radar stock, although once Buffett buys it, it's pretty much on every investor's radar. It's a classic Buffett pick, with a product that everyone needs, a moat, and a stock that may be undervalued relative to its future opportunity. Shares trade at 33 times trailing-12-month earnings.

Floor & Decor's sales growth has been slow and steady, and investors should expect its stock performance to be the same. This isn't a high-growth tech stock, but it looks like a reliable choice for strong long-term growth. Floor & Decor stock is still more than 30% off of its high in 2021, and it's an excellent pick to get your portfolio ready for a bull market.

A recovery in the works

Jeremy Bowman (Target): Almost everything that could go wrong for Target in 2022 did. It bulked up on inventory in all the wrong places, forcing it to mark down merchandise at greater levels than normal. Margins fell due to the markdowns and a shift in consumer buying patterns away from discretionary goods to staples like food and beverage, and management admitted that it failed to anticipate how consumer spending habits would evolve in 2022.

Like much of the retail sector, Target is also feeling pressure from high inflation and the threat of recession as consumers became more careful with their spending in areas like apparel, home, and electronics.

Target's guidance for 2023 called for just flat comparable sales growth and for operating margin to still be down from pre-pandemic levels of 6%. However, management said that depending on the macro-level economy, its operating margin could recover from 3.7% last year back to 6% as soon as 2024, and it expects operating margin to expand beyond that over time.

Target has a number of competitive advantages that should begin to shine again once the economy turns and a new bull market begins. Those include its store-based fulfillment system, which handles online orders more cheaply than a distribution center, as Target benefits more from online pickup than most of its retail peers. 

The company also has at least 10 private-label brands that generate annual revenue of at least $1 billion dollars, and it continues to expand its owned brand strategy with new products and categories. Owned brands generate higher margins than national brands and help establish customer loyalty.

Finally, Target also has a number of shop-in-shop partnerships with brands like Apple, Walt Disney, Ulta Beauty, and Starbucks that help drive traffic and distinguish it from its competitors.

While the next year could be challenging for Target depending on what happens with the economy, it looks well positioned to soar in the next bull market.