Benzinga - Treasury Partners’ Richard Saperstein is out with his three best ideas for 2023. A pair of his top picks are up more than 30% year-to-date despite the market being on track to log its worst year since 2008.
What Happened: Saperstein laid out his top three stocks for next year Thursday afternoon on CNBC's "Fast Money Halftime Report."
Microsoft Corp (NASDAQ: NASDAQ:MSFT) is the only name that's in the red for 2022, but Saperstein expects that to change in 2023.
"Microsoft should be a core holding in anyone's portfolio because it's really the intersection of the cloud and software along with gaming," Saperstein said.
Microsoft has a 17% CAGR and cash flows have essentially doubled over the last three years, he noted.
The stock has low cyclicality and is one of the best ways to participate in the cloud, to which he said every investor should have exposure.
Related Link: This Is What Whales Are Betting On Microsoft
Lockheed Martin Corp (NYSE: NYSE:LMT) is the second name on Saperstein's list of top picks for 2023. The company's valuation has become increasingly attractive, he said.
Lockheed trades with a forward price-to-earnings multiple of approximately 17, according to Benzinga Pro. That number is down from approximately 24 times, Saperstein said, adding it's now trading at about 8% of cash flow.
"That, plus the fact that they have a $140-billion backlog ... $65 billion in annual sales and they're right in the mix of what is being sought after by all governments around the world that are increasing their defense budgets," Saperstein said.
Canadian Natural Resources Ltd (NYSE: CNQ) rounds out Saperstein's list.
The company's operating cash flow is 22% per year and free cash flow sits around 16%, which Saperstein called "unbelievable."
Canadian Natural Resources is focused on reducing debt and returning capital to shareholders, he said: "It's a great positioned company to own."
MSFT, LMT, CNQ Price Action: Microsoft is down approximately 28% year-to-date. Lockheed is up about 37% since the start of the year and Canadian Natural Resources is up approximately 31%.
Photo: courtesy of Microsoft.
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