Top 3 stocks for January 2023

During January, a huge wave of euphoria swept the stock markets leading to big rally dominating on US stocks market. Inflation concerns eased slightly in the market, and on top of that, earnings season was back in full swing with a few surprises. Active traders who did not sleep on the onset of the new year thus had many opportunities to profit. But among all the titles on the US stock market, there were 3 particularly interesting ones. Care to know which ones? Then read on!

Tesla - a mixture of good results and FOMO

FOMO - the fear of missing out - is a factor that has historically driven Tesla stock to incredible levels. So with the return of retail capital and good earnings results, Tesla stock is once again skyrocketing. A large portion of retail investors are reaching for Tesla stock. They are up a hard-to-believe 75% since the beginning of the year. And once again, Elon Musk is getting wealthier and wealthier with each passing day. But the company's stock growth is by no means undeserved. What exactly did Tesla announce to grow like this?

Tesla shares in the MT4 platform on the H1 timeframe along with the 50 (yellow) and 100 (blue) daily moving averages
Tesla shares in the MT4 platform on the H1 timeframe along with the 50 (yellow) and 100 (blue) daily moving averages

Virtually all the numbers were positive. Tesla's revenue came in at $24.32 billion and earnings per share at $1.19. This was a positive surprise for the market as it was expecting sales of USD 24.07 billion and earnings per share of USD 1.12. Even more positive was the outlook for this year, in which it plans to deliver 1.8 million new vehicles. Towards the end of the year, there were significant doubts regarding the demand for Tesla cars, causing the stock to fall to US$100 apiece. Tesla thus resorted to dramatic worldwide price cuts, which clearly worked. There are now queues for Teslas and demand is reportedly 2x higher than production. If all goes well, Tesla could even deliver over 2 million cars this year. Another positive was the new Cybertruck model that should go into production this year. However, it wasn't all positive - free cash flow ended below estimates at $1.42 billion (the estimate was $3.13 billion), as did gross margin.

On the plus side, the lawsuit that was settled regarding Elon Musk's several-year-old tweet proclaiming a takeover of Tesla at a price of $420 per share. In addition, Tesla shares have received several upgrades from major global banks. So it's quite possible that their rally is far from over. We've seen several times in history that Tesla stock can rise even when the entire market is falling. Of course, with a P/E ratio of over 50, Tesla comes across as extremely overpriced (BMW, for example, has a P/E ratio of around 3.5), but we've become accustomed to the fact that this Californian carmaker has a cult-like status among its fans. Its good earnings results being one of the reasons why. So the outlook for this year may once again belong to Tesla.

Pfizer - record sales thanks to covid

It looks like the complete opposite of Tesla so far this year for Pfizer. It too reported results for the last quarter of last year and for the full year 2022 during January, but these were full of contradictions. Pfizer achieved sales of $100 billion last year, an all-time high for the company. About half of the revenue was from coronavirus vaccines. This is literally a gold mine for Pfizer. So its retreat has had a significant impact on the outlook for sales this year. Pfizer expects revenues to be in the range of USD 67 billion to USD 71 billion, a 30% drop year-on-year. If there's one thing investors don't like, it's a negative outlook. So Pfizer's 14% drop in shares so far this year isn't too surprising.

Pfizer shares on the MT4 platform on the H1 timeframe along with the 50 and 100 day moving averages
Pfizer shares on the MT4 platform on the H1 timeframe along with the 50 and 100 day moving averages

This year, the company is expected to make $13.5 billion from coronavirus vaccines and $8 billion from Paxlovide. Earnings per share are expected to fall by as much as 50% compared to last year's record $6.58. So this is a sort of return to normal for Pfizer. Sales and profits were about half that before 2020. Pfizer stock certainly has a lot to offer even without the coronavirus - the current dividend is nearly 4% and the company is also sitting on a huge amount of cash. This allows it to invest in new drug development to strengthen its market position, or start buying back its shares, which would also please investors.

However, we don't expect big miracles from Pfizer this year, the gradual earnings revisions will be more to the downside and Pfizer stock may fall back below $40. Thus, this year will be more in favor of speculators. For long-term investors, however, it may also be an interesting choice due to the high dividend. But Pfizer is also the target of frequent controversies. In January, for example, an interview with a company representative was leaked, who admitted that Pfizer itself mutates the coronavirus in order to prepare vaccines for these new mutations.

Palantir - the bet on the future is not working out yet

Since the beginning of the year, Palantir has also been doing well, with its shares appreciating by almost a third. Palantir is in the data analytics business and also provides its services to the US government. It has long been talked about as a revolutionary company and a clear bet on the future. However, this bet hasn't worked out too well so far, exactly 2 years ago Palantir shares were worth over $30, today they are worth around $8. However, we are still waiting for last quarter's financial results, which should be released on February 13. Thus, the growth of the shares from January is more related to the return of risk-on sentiment to the stock markets. But what can we expect from Palantir in the coming weeks?

Shares of Palantir in the MT4 platform on the H1 timeframe along with the 50 and 100 day moving averages
Shares of Palantir in the MT4 platform on the H1 timeframe along with the 50 and 100 day moving averages

Q4 revenue is expected to grow by 16% year-on-year to EUR 502.6 million. Earnings per share should be USD 0.03 (up 1 cent). So these are not miraculous numbers, what will be important is the outlook for this year. In particular, the expectations for commercial revenues will be key, as these have long lagged behind those of the government. Palantir has around 60% of its revenues from the latter. The company is looking to expand into the healthcare and energy sectors, but a possible recession could derail these plans.

So all the expected risks may not be priced into the stock, especially after the massive run-up in January. Thus, there are certainly plenty of waves on the horizon that could send Palantir in either direction. Thus, it will depend on earnings and the overall mood of the stock markets. If the risk-on sentiment is maintained, Palantir stock can strengthen further. However, the opposite scenario seems more likely for now.

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