While volatility persists, markets have managed to get off to a strong start in 2023. All three of the major U.S. stock indices are positive on the year, with the technology-laden Nasdaq leading the pack with a 14% year-to-date gain. However, a rising tide has not lifted all boats, at least not yet. Some stocks to watch are up nearly 30% since the start of January. Others stocks continue the downward trend they endured last year.
This environment requires investors to choose the stocks they buy carefully, separating the wheat from the chaff. Earnings continue to drive share prices higher or lower, as does the macroeconomic environment and lingering fears of a global recession at some point this year. As always, investors will have to do their homework to find winning equities.
Here are seven stocks to watch if you’re looking for the next high flyer.
|NYT||The New York Times||$40.12|
|AMD||Advanced Micro Devices||$83.21|
|ODFL||Old Dominion Freight Line||$355.00|
|CMG||Chipotle Mexican Grill||$1,606.91|
The New York Times (NYT)
First up on my list of stocks to watch is The New York Times (NYSE:NYT), which is up 24% so far in 2023 following strong fourth-quarter and full-year 2022 earnings. The newspaper company added more than 1 million digital subscribers in 2022, bringing its total number of paying subscribers to 9.6 million. Annual revenue totaled $2.3 billion, an 11.3% increase from 2021.
While advertising revenue remains important, the company is no longer dependent on it as it was in the past thanks to the growth in digital subscriptions. The New York Times also continues to expand and grow its offerings, having bought the popular Wordle puzzle game and sports-focused news site The Athletic last year.
Along with its most recent earnings, The New York Times announced a $250 million stock buyback program and raised its quarterly dividend 22% to 11 cents a share.
NYT stock is essentially flat over the past 12 months, down 1.6%. In the past five years, the share price has gained 66.5% at a time when media companies, especially newspapers, are supposed to be dying.
UFP Technologies (UFPT)
Don’t sleep on medical device maker UFP Technologies (NASDAQ:UFPT). The Newburyport, Massachusetts company has been around since 1963 and UFPT stock has been a long-term gainer. In fact, as portfolio manager Eddy Elfenbein notes, the share price has increased 150-fold over the past two decades. “That’s enough to turn $7,000 into over $1 million,” Elfenbein writes.
The company operates in a niche market for medical devices and its strong position in that market is reflected in its earnings. In the third quarter of 2022, UFP’s sales grew 91% year over year, while organic sales rose 21.7% and operating income swelled by 37%. Earnings per share rose 173% to $1.36, trouncing analyst estimates of 94 cents a share. The company is expected to report Q4 and full-year results in early March.
Stellar earnings have propelled UFPT stock higher both in the short and long term. Despite a 7% year-to-date decline over the past 12 months, the share price has risen 51%. Over the past five years, the stock is up nearly 283%.
UFP Technologies doesn’t offer a dividend, but its current price-earnings ratio of 23 looks fair given the company’s consistent earnings growth and its share price appreciation.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is one of the tech stocks to watch that seems ready to take off. Shares of the semiconductor company saw a big bounce higher after the latest earnings report. Despite a tough operating environment, the Santa Clara, California-based company managed to beat on the top and bottom lines.
AMD reported adjusted EPS of 69 cents versus 67 cents anticipated on Wall Street. Revenue amounted to $5.6 billion versus a forecasted $5.5 billion.
Despite the sector-wide slowdown, AMD’s semiconductors and microchips remain in high demand and the company continues to take market share from rival Intel (NASDAQ:INTC). AMD stock has risen 28.5% to start 2023 and is up 636% over the past five years.
Old Dominion Freight Line (ODFL)
Truck transport isn’t known for being cutting-edge or exciting, but it remains an essential part of the North American economy and a key means by which goods are moved across the country and the continent. The essential nature of its business may explain why Old Dominion Freight Line (NASDAQ:ODFL) has been killing it lately.
ODFL stock has outperformed in the short and long term. So far in 2023, the Thomasville, North Carolina-based company’s stock is up 25%. In the past 12 months, the share price has gained 16%. Over five years, it is up 309%. Not bad for an 89-year-old company whose “other business” is running a household moving service.
The company just reported exceptional earnings and announced that it is hiking its quarterly dividend 33% to 40 cents a share. Wall Street had forecast EPS of $2.68. The company reported that it earned $2.92 a share, and ODFL stock jumped 10% higher in a single trading day.
Headquartered in Medina, Minnesota, Polaris (NYSE:PII) manufactures snowmobiles, power boats, all-terrain vehicles and motorcycles, including the legendary Indian Motorcycle brand. Basically, the company specializes in fun, mainly off-road, vehicles. And while it’s only up 3% over the past five years, PII stock is making a run so far in 2023. The stock has gained 14% year to date.
Driving the share price higher has been decent earnings and a growing market for recreational and off-road vehicles. On Jan. 31, Polaris reported its fourth-quarter gross profit increased 43% year over year to $573 million. Adjusted EPS of $3.46 easily beat analysts’ consensus forecast of $3.27. Polaris’ operating margin grew 260 basis points to 10.6%. Those types of numbers inspire confidence in PII stock.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG), the popular fast-casual restaurant chain that specializes in bowls, tacos and burritos, just reported a disappointing quarter. After raising the prices of its menu items throughout 2022 to keep up with inflation, the company reported a fourth-quarter miss on both the top and bottom lines. Adjusted EPS of $8.29 was well below the $8.90 forecast on Wall Street, and revenue of $2.18 billion fell short of the $2.23 billion that was expected.
But investors who focused on the Q4 data missed the fact that Chipotle issued bullish forward guidance for the year ahead. The Newport Beach, California-based company is projecting same-store sales growth in the high single digits for the first quarter, which is better than the first-quarter same-store sales growth of 6.7% expected among analysts. A total of 11 analysts raised their price target on CMG stock after the Q4 print.
CMG stock is up nearly 16% this year. Shares have risen 529% over the past five years.
Last up on my list of potential high-flyer stocks to watch is Ferrari (NYSE:RACE). The stock is lapping most other auto stocks, having gained 24% YTD, 17% over the past year and 80% over the past five years. At $266 a share, the stock isn’t cheap. But it has been a steady earner for shareholders for many years now.
The stylish Italian supercar maker just reported that its 2022 profit rose 13%, and it guided for an even better year in 2023. Despite the premium cost of its sportscars, Ferrari says demand remains “persistently high.” The Maranello, Italy-based automaker shipped a record 13,221 vehicles in 2022, up 19% from 2021. This stock is a definite high flyer.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.