The past several weeks have been volatile ones for the market, upending what looked like a budding bull market. The S&P 500 now sits 6% below its early February peak, seemingly unable to get back above a proverbial hump. Of course, some of the S&P 500's stocks are doing much, much worse.
In a handful of cases, however, stocks have been unduly sold off. Investors just aren't interested, presuming there's a good reason for these unusually low prices.
Big mistake. Sooner or later -- and probably sooner than later -- the market's going to correct its mistakes, putting these tickers back on track for big gains in 2023. Here's a closer look at three of the best bets among these names.
1. Tyson Foods
It would be easy to jump to bearish conclusions about packaged meat giant Tyson Foods (TSN 1.83%). The company recently announced it would be shuttering two facilities, laying off 1,700 employees as a result. That decision follows an earnings miss for the organization's most recently completed quarter, which CEO Donnie King characterized as being "hit in the mouth." Simply put, there's too much meat suddenly available to consumers, creating a highly competitive environment against a backdrop of steep inflation. Never even mind the CFO's recent guilty plea to trespassing charges -- for trespassing done while he was intoxicated. It's just not a good look.
Largely lost in the noise, however, is that Tyson has faced the same inflation and supply situations over and over again, and pushed through them all to emerge as a bigger and better company each and every time. This time around shouldn't be any different.
Indeed, the tide may make a turn for the better even sooner than most investors might believe.
While still relatively high, fuel prices are down 30% from last year's peak and still falling. The U.S. Energy Information Administration estimates the average price for a gallon of gasoline will slide from its current level of $3.50 to an average of $3.36 for the year to an average of $3.11 per gallon in 2024. This will have the effect of lowering the industry's overall logistics costs.
At the same time, although production was up to start 2023, the USDA is calling for a full-year decline in the United States' beef and poultry production -- the first decline in almost a decade. This, of course, will pare back total supply, giving Tyson more much-needed pricing power following its tough previous quarter.
2. Booking Holdings
With or without the global economy's help, consumers are traveling again. Travel spending in January was 4% better than the pre-COVID-19 2019 tally, according to numbers from the U.S. Travel Association, while demand for air travel was up 3% for the same timeframe. In this same vein, research outfit HTrends indicates that 23% of Americans intend to travel more this year than they did in 2022. We're seeing similar demand growth materializing overseas, too, as pandemic-curbing restrictions continue easing.
All of it bodes well for online travel arrangements outfit Booking Holdings (BKNG -0.45%), which is projected to produce top-line growth of more than 17% this year. Analysts are calling for more than 11% revenue growth next year. Per-share earnings are projected to improve by more than 50% during this two-year span.
Shares had been rallying firmly from their October low, at least until early this month, when the collapse of SVB Financial's Silicon Valley Bank thwarted the effort. Even without the setback since then, however, shares are only priced about where they were in mid-2021 when the pandemic was in full swing. There's more upside to be priced in here.
3. Ford Motor Company
Last but not least, add carmaker Ford Motor Company (F 0.66%) to your list of stocks that could skyrocket in 2023.
If you keep regular tabs on the company's stock, then you probably know it's been anything but a star performer of late. Indeed, shares are within sight of a new 52-week low, down by more than half of their early 2022 high. A combination of economic malaise, supply chain headaches, sky-high production, and operating costs are all working against the stock at the same time the company is working to ease its way into the electric vehicle market. It hasn't been easy.
The worst of it, however, may already be fully reflected in the stock's price, and then some. Shares are trading at less than 8 times their projected earnings of $1.52, with a little sales and earnings growth in the cards for next year on the heels of a successful, ongoing pivot toward electric cars. The company's total EV sales more than doubled in 2022, making it the United States' second-biggest electric vehicle manufacturer. Its EV production should swell to an annualized pace of 600,000 units by the end of this year, too, en route to a yearly pace of 2 million by 2026. By 2030, about half of the carmaker's output should be electric automobiles.
Yes, Ford is increasingly becoming a purer EV play.
That's exactly what it should be evolving into, though. A recent survey performed by CarGurus indicates about 40% of U.S. consumers intend to purchase an EV within the next five years, and that number only grows when the timeframe is extended. In the same vein, Precedence Research estimates the U.S. electric vehicle market will grow by an average of 23% per year through 2032. Deloitte suggests the biggest impediment to stronger adoption of electric vehicles is still their high price. But, as Ford expands its production, its per-car production costs -- and therefore sticker prices -- should continue to fall to increasingly affordable levels.
