Avoid These Stocks in 2023

Amanda Heckman|January 7, 2023

New year, same problems.

The markets greeted the new year with trepidation, trading sideways for much of the week.

It’s not surprising, really. The economy picked up right where it left off. We didn’t get a magic reset just because there’s a new calendar on the wall.

And there’ll be more trouble ahead as many companies fight for survival against a backdrop of high inflation and rising interest rates.

It’s clear Amazon’s woes will carry over into the new year. This week, CEO Andy Jassy announced Amazon would cut 18,000 jobs – more than the company had initially planned – to reduce costs. The news prompted a slight rebound in share price… though it will take much more to make up for the 50% decline the stock has seen over the past year.

Software company Salesforce is also cutting back, slicing 10% of its workforce… and video platform Vimeo jumped into the layoff fray with an 11% cut of its own.

IBM, meanwhile, is walking a tightwire. The tech giant is trying to lower its costs without making headlines. Management is encouraging employees to leave positions on their own through “redeployments,” eliminating jobs without formally firing anyone.

Ouch.

Over in the real estate sector, an increasingly tough market has caused Compass to announce its third round of layoffs in eight months. The company IPO’d in 2021 at an $8 billion valuation… and has seen its market cap downsized to just $1 billion.

Goldman Sachs plans to reduce its banking staff by 4,000 workers… and rumors are percolating that it will cut employees’ free coffee to boot.

Online clothing service Stitch Fix announced plans to cut 20% of its salaried workforce…

And the embattled home goods retailer Bed Bath & Beyond, no longer a “meme stock,” is facing real trouble. The company said it is considering bankruptcy. Its stock tanked 30% on the announcement.

Suffice it to say… 2023 is starting off with a bang… but not the good kind.

So how do investors pick through the mess and find stocks that won’t be hard hit this year?

In our “Big Prediction” issue of Manward Letter, released earlier this week, Andy outlined several key financial metrics to look at when evaluating the health of a company. While those specifics are reserved for paid subscribers (become one here)… there’s one thing investors can easily look at… a company’s business model

As Andy explained…

We want to see a model that is built for the long term… not the short term.  [Look at the] banks that failed in 2008. It was an overinvestment in short-term assets that did them in. A quick-hitting housing boom offered a shot at fast-moving money… but the bust came even quicker. Berkshire Hathaway (BRK) spreading its money around on companies that make things or have reliable cash flows shows it’s focused on the long term.

Many businesses, in all corners of the economy, have been hit hard by high inflation, rising interest rates and reckless spending. The trouble is coming home to roost for those companies.

As you make your investing decisions in the new year, it will be crucial that you recognize them… and put your money elsewhere.

Seeking out companies with solid business models, that are built for the long term, will be a major key to successful investing in 2023.

Note: In our January prediction issue, Andy also recommended a financial fortress of a blue chip to bolster your portfolio for the year ahead. It possesses everything we look for in a stable and strong long-term holding. It easily has the potential to double your money. See how to get the ticker here.