Dear BBBY Stock Fans, Mark Your Calendars for April 3

Bed Bath & Beyond (NASDAQ:BBBY) admitted it would have trouble with lenders if its stock price doesn’t get over $1/share by April 3.

The admission came in a filing with the Securities and Exchange Commission (SEC). Shares were due to open March 23 at about 85 cents each, with a market capitalization of $93 million.

BBBY hopes the amendment on “price failure” will secure $100 million in financing for April, under warrants for convertible preferred shares issued Feb. 7. The company last received cash under the arrangement on March 7.

BBBY Stock: A Hard Landing

BBBY has been seeking a stable landing place ever since Sue Gove became interim CEO last July.

The company announced an offering of preferred warrants in February that could raise up to $1 billion. At the time, Gove called it a “runway to execute our turnaround plan.” The offering ended a late effort to squeeze short sellers that sent the stock as high as $5.86 per share on Feb. 6.

The financing plan may be threatened if BBBY stock becomes a “penny stock,” consistently selling for under $1 per share. It dropped below that level on March 17 and hasn’t returned to it since.

Gove’s latest attempt to buy time is a reverse stock split, to be voted on March 27. Reports of the company’s imminent demise have been swirling all year.

The retailer’s most recent earnings report only runs through November. Its Christmas season report is due April 12. Analysts expect a loss of as much as $2.14 per share.

Gove has been closing stores to conserve cash. This includes all its Harmon beauty products stores.

Shareholders of record on March 27 will be eligible to vote on the reverse split. A date for the meeting has not yet been announced.

What Happens Next?

Companies like DollarTree (NASDAQ:DLTR), TJX (NYSE:TJX) and Burlington Stores (NASDAQ:BURL) are grabbing leases abandoned by BBBY as it falls. Failure at this point seems a likely option.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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3 AI Stocks to Buy Sitting in the Sweet Spot

AI stocks to buy are increasingly getting a lot of attention. Investors cannot overlook its tremendous potential. With fresh developments constantly being made, AI stocks are fast becoming an enticing investment option.

With AI already being used in healthcare and finance to enhance decision-making processes, improve efficiency, and lower costs, there has been a significant increase in demand for AI products and services. As a result, we expect AI stocks to experience significant growth in the foreseeable future.

It is hard to state the size of the AI market firmly. However, Precedence Research expects the artificial intelligence market to reach $1,591.03 billion by 2030, with a compound annual growth rate (CAGR) of 38.1% from 2022 to 2030.

Regardless of any estimates, one thing is for sure. AI is here to stay and will transform various industries. Under these circumstances, investors need to remain vigilant. They cannot let this opportunity slip. Despite not being immediately apparent, AI will inevitably penetrate every industry in the future. Therefore, investing in AI stocks is a great way to diversify your portfolio.

The following article contains three AI stocks to buy with solid operating models and prospects. If you want to invest in forward-thinking companies, it is worth considering these three:

MSFT Microsoft $277.26
TSM Taiwan Semiconductor Manufacturing $94.23
ANET Arista Networks $168.04

Microsoft (MSFT)

In 2019, the software giant Microsoft (NASDAQ:MSFT) invested $1 billion in OpenAI. Because of the partnership, Microsoft Azure became OpenAI’s exclusive cloud provider.

In January 2023, Microsoft furthered its commitment to OpenAI with a new multiyear, multi-billion-dollar investment. The software giant is reportedly investing $10 billion in OpenAI, the company behind the AI tool ChatGPT. The innovative platform is why the entire investment world is taking notice of AI.

By combining its own proprietary Prometheus model with OpenAI’s model, Microsoft aims to revamp its Bing search engine. Whether or not Microsoft can take away meaningful search share from Google is debatable.

As of January 2023, Bing, the online search engine, held approximately 8.85% of the global search market. Google, the market leader, had a share of around 84.69%. Yahoo’s market share was recorded at 2.59%.

While it is hard to say whether Microsoft’s Bing search engine will capture significant market share from Google, Microsoft is leading the way in adopting AI-enabled enterprise use cases.

In non-AI related developments, Kirk Materne, an analyst at Evercore ISI, upped his target on the software giant from $280 to $295. According to the Financial Times, Microsoft is planning to launch a new mobile gaming app store in the upcoming year, subject to regulatory approval of its bid to acquire Activision Blizzard (NASDAQ:ATVI).

However, Microsoft’s 10% drop in share price over the past year reflects the current state of the tech industry. Since the beginning of this year, over 100,000 layoffs have occurred in the tech industry. As a result, investors have been skeptical of tech companies’ growth potential.

But Microsoft is a proven performer. And its AI initiatives are yet another reason to buy. Hence, any weakness is a great opportunity to purchase more stock.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

Taiwan Semiconductor Manufacturing (NYSE:TSM) is the largest semiconductor foundry in the world, specializing solely in semiconductor fabrication.

TSM’s cutting-edge process technology and advanced packaging services facilitate the development of AI technology by enabling the design of advanced chips. It is a pick-and-shovel play among AI stocks.

However, over the past year, TSM stock is down almost 14%, mainly because analysts expect a slowdown this year, as its main customers experience post-pandemic headwinds.

AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) experienced significant growth during the pandemic. That comes as no surprise. Due to the crisis to increased demand for PC upgrades for online classes, remote work, and gaming. However, this growth has slowed down as lockdowns ended.

Qualcomm (NASDAQ:QCOM) benefited from the 5G upgrade cycle. Still, the end of that cycle, coupled with inflationary headwinds and COVID-19 lockdowns in China, has reduced the market’s interest in new smartphones.

However, despite facing competition in the manufacturing of smaller, more energy-efficient chips, TSMC continues to do well.

In the fourth quarter of 2022, TSMC earned 32% of its revenue from 5nm chips, 22% from 7nm chips. Meanwhile, 54% of total wafer revenue came from the segment defined as 7-nanometer and more advanced technologies.

TSMC is anticipated to generate additional revenue from the 5nm node this year, as it ramps up production for its latest 3nm chips, which are estimated to make up a “mid-single-digit” percentage of the company’s 2023 revenue.

Considering these circumstances, TSMC presents an enticing prospect among AI stocks to buy.

Arista Networks (ANET)

Arista Networks (NYSE:ANET) is at the forefront of providing cloud networking solutions to enterprise data centers, cloud service providers, and internet companies.

Its products include high-performance switches, routers, and other network equipment designed to meet the demands of high-bandwidth, low-latency applications.

AI workloads are bandwidth-intensive, requiring many interconnected processors and gigabits of throughput. GPUs employed for AI training can carry out billions of operations in parallel. With the increasing sophistication of AI models, the networks they operate on have also become more advanced.

In response, Arista’s switches are optimized to meet the escalating need for speedy and reliable data transmission within and between data centers. The switches will provide the required performance and scalability to tackle even the most arduous applications.

Jayshree Ullal, President and CEO of Arista Networks, declared that the fiscal year 2022 proved remarkable for the company, even amidst industry-wide supply chain obstacles. Arista Networks surpassed growth, revenue, and profitability projections, with a revenue of $4,381.3 million, a significant rise of 48.6% from the previous fiscal year of 2021.

Considering the expanding AI industry, investing in this stock could be wise.

On the publication date, Faizan Farooque did not hold (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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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Why Most Analysts are Bearish on AI Stock

AI stock - Why Most Analysts are Bearish on AI Stock

Source: shutterstock.com/Nadya C

C3.ai (NYSE:AI) has pulled back in recent weeks, but it’s fair to say that the market remains bullish on AI stock. Shares in this provider of enterprise artificial intelligence software bolted higher during January.

That’s when investors, after Microsoft’s (NASDAQ:MSFT) reported $10 billion investment into ChatGPT developer OpenAI, started experiencing renewed excitement about the AI mega-trend. With ChatGPT’s rise viewed as a sign of accelerated adoption of generative AI technology, the market placed its bets on other stocks with high exposure to this trend.

It has also helped that C3.ai struck while the iron was hot, announcing the launch of its C3 Generative A.I. Product Suite. Yet despite these recent developments, while market participants have become more bullish, the same can’t be said about sell-side analysts. By-and-large, they are less upbeat.

The Sell-Side’s Current Stance

According to Marketbeat, an online investing resource that aggregates sell-side ratings, the current consensus analyst rating for C3.ai stock is “hold.” In fact, out of 11 analyst ratings available, seven rate it a “hold,” with just two rating it a “buy,” and two  rating it a “sell.”

Interestingly enough, this consensus opinion is unchanged, compared to where it was before “A.I. mania” first swept the market in January. Back then, AI stock also had a consensus “hold” rating, albeit with a slightly lower average price target ($16.80 versus $20.45 per share today).

In the past two months, only one sell-side analyst (DA Davidson’s Gil Luria) has initiated coverage. In his research note, Luria assigned shares a “buy” rating, and a $30 per share price target, on Feb. 2.  Luria cited his view that the rise of generative AI is a “game changer for the company” as the one reason behind his rating.

Another analyst, JMP Securities’ Patrick Walravens is the only other Wall Street analyst with a “buy” or equivalent rating on AI. Earlier this month, Walravens reiterated his “market outperform” rating, and raised his AI price target from $19 to $27 per share.

Most Analysts Consider It a ‘Show Me’ Stock

The analysts from DA Davidson and JMP Securities concur with the market’s view on AI stock, but why does the opinion of the rest of the sell-side differ? Let’s look at some of the less upbeat analyst community about this hot A.I. play.

On March 2, Marketwatch.com reported on the stock’s post-earnings rally, and how it contrasted with analyst sentiment. For example, Needham’s Mike Cikos, who has maintained a “hold” rating on AI stock since September, believes it is too early for the company to declare success with its transition to a consumption-based pricing model.

Other analysts, like Morgan Stanley’s Sanjit Singh and Deutsche Bank’s Brad Zelnick, who both hold “sell” or equivalent ratings on AI, have expressed similar skepticism. Both believe that C3.ai’s valuation is already pricing-in a growth re-acceleration that has yet to arrive.

The rest of the sell-side considers C3.ai to be a “show me” stock. It won’t be until the aforementioned trends make an impact on the bottom line that they will change their view.

The Verdict

In C3.ai’s recent quarterly earnings release, CEO Thomas Siebel provided statements that suggest that the company is on the verge of experiencing a big jump in revenue growth and a move towards non-GAAP profitability as a result.

There’s no reason to doubt Siebel’s statements. However, it may be wise to adopt the sell-side’s “show me” stance. With this stock more than doubling in price over the past three months, C3.ai’s improving fundamentals appear to be priced-in.

Recent “A.I. mania” has already faded, and could continue fading in the months ahead. More of the uncertainty surrounding the company’s transformation into a faster-growing, profitable firm could clear up. This in turn could strengthen the bull case.

With this in mind, you might take a similarly-cautious stance on AI stock.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

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3 Dividend Champions for Long-Term Income

Income investors value reliability and consistency, as well as high dividend yields. Some stocks provide a combination of these factors, such as the Dividend Champions — stocks that have raised their payouts for at least 25 years in a row.

These companies have proven that they can manage through recessions while continuing to pay dividends each year and raise their dividends on an annual basis.

These three Dividend Champions have long histories of dividend growth, market-beating yields and the ability to raise their dividends each year going forward.

Dividend Champion: Stryker (SYK)

The Stryker (SYK) office in Fremont, California.

Source: Sundry Photography / Shutterstock.com

Stryker (NYSE:SYK) is a global leader in the medical device sector. The company’s product lines include surgical equipment, neurovascular products and orthopedic implants.

The company has continued to generate growth in 2023, even in a difficult macroeconomic environment. On Jan. 31, 2023, Stryker reported fourth-quarter and full-year earnings results for the period ending Dec. 31, 2022. For the quarter, revenue grew 10.6% to $5.2 billion, beating estimates by $230 million. Adjusted earnings per share (EPS) of $3, which compared to $2.71 in the prior year and was 16 cents above expectations.

For 2022, revenue grew 7.8% to $18.4 billion while adjusted EPS of $9.34 was up slightly from $9.09 in the prior year. Organic revenue was 13.2% for the quarter and 9.7% for the year. For the quarter, MedSurg and Neurotechnology had organic growth of 16.9%, while Orthopaedics and Spine grew 8.4%. Results for both businesses were driven by strong demand in volume even as the company had slightly lower realized prices.

Stryker guided for 2023 as well. The company expects organic revenue growth of 7% to 8.5% for the year. Adjusted EPS is forecasted to be in a range of $9.85 to $10.15, which would represent growth of 7.1% at the midpoint.

Stryker has increased its dividend at an average rate of almost 12% per year over the past 10 years. The company has now increased its dividend for 29 consecutive years. Shares currently yield 1.1%.

Dividend Champion: Fortis (FTS)

The Fortis (FTS) website is displayed on a smartphone screen.

Source: madamF / Shutterstock.com

Fortis (NYSE:FTS) is Canada’s largest investor-owned utility business with operations in Canada, the United States and the Caribbean. It is cross-listed in Toronto and New York. At the end of 2022, Fortis had 99% regulated assets: 82% regulated electric and 17% regulated gas. As well, 64% were in the U.S., 33% in Canada and 3% in the Caribbean.

Fortis has increased its dividend for 49 consecutive years, and the stock currently yields 4.3%.

Fortis reported Q4 2022 results on Feb. 10, 2023. For the quarter, it reported adjusted net earnings up 16% versus Q4 2022, while adjusted EPS rose 14%. The full-year 2022 results provide a bigger picture. Adjusted earnings rose 9% year over year (YOY), while adjusted EPS increased by 7%. For 2023, it plans capital investments of C$4.3 billion. We initiate our 2023 EPS estimate at $2.20.

After releasing its five-year capital plan of C$22.3 billion for 2023 to 2027, which suggests a mid-year rate base growth at a compound annual growth rate of ~6.2% from C$34.0 billion in 2022 to C$46.1 billion in 2027, the company also revealed its dividend growth guidance of 4-6% through 2027.

Because demand for Fortis’ utility services doesn’t change much in various economic environments, Fortis’s results have been quite resilient through economic uncertainties, including the one we’re experiencing in which inflation and interest rates are higher than in recent history. Fortis’ liquidity position is strong, including C$3.8 billion of undrawn liquidity available from $5.9 billion credit facilities at the end of Q4 2022.

Fortis’ payout ratio had been about 70% of earnings, which is where it’s heading. The dividend is important to management, and we believe it is safe and should continue to rise for years to come. Fortis’ competitive advantage is its size and scale. Additionally, Fortis is unique because of its cross-border exposure. Its timely U.S. acquisitions of regulated utilities since 2013 have allowed Fortis to now generate more than half of its revenue from the country.

Dividend Champion: Bank OZK (OZK)

hands at desk near laptop computer, with one hand holding a pile of hundred dollar bills

Source: shutterstock.com/CC7

Bank OZK (NASDAQ:OZK), previously Bank of the Ozarks, is a regional bank that offers services such as checking, business banking, commercial loans and mortgages to its customers in Arkansas, Florida, North Carolina, Texas, Alabama, South Carolina, New York and California. The $5.1 billion market cap bank was founded in 1903 and is headquartered in Little Rock, Arkansas.

On Jan. 3, 2023, Bank OZK announced a 34-cent quarterly dividend, representing a 3% increase over the last quarter’s payment and a 13.3% increase YOY. This marks the company’s 50th consecutive quarter of raising its dividend to go along with 26 straight years of boosting its payout.

In mid-January, Bank OZK reported financial results on Jan. 19, 2023 for the fourth quarter of fiscal 2022. Total loans and deposits grew 13.5% and 6.4%, respectively, over the prior year’s quarter. Net interest income grew 25% thanks to loan growth and much higher interest rates. Additionally, the bank reduced its share count by 8%. As a result, EPS grew 14.5% and exceeded the analysts’ consensus by 4 cents. Bank OZK has exceeded the analysts’ consensus in 10 of the last 11 quarters.

Bank OZK had increased its profits on a per share basis in almost every year since the financial crisis, which was a strong feat for a bank. In the 2011-2019 stretch, EPS grew by nearly 11% per year. Moreover, Bank OZK has not only been growing organically, but over the last decade the bank has repeatedly made acquisitions that management viewed as suitable.

Bank OZK has raised its dividend at a very strong pace over the last decade, with multiple dividend raises each year. Indeed, dividends have been increased for 27 years in a row, while shares currently yield 3.8%.

On the date of publication, Bob Ciura did not hold (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.

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Accounts to buy bonds from the government jumped fivefold as yields boomed

Young man working at home

Eva-katalin | E+ | Getty Images

Investors seeking safety from last year’s market havoc went running to Uncle Sam — that is, they opened more than 3 million accounts to buy Treasurys and other bonds directly from the U.S. government.

In 2022, savers created 3.6 million accounts at TreasuryDirect.gov, a website where investors can buy a range of savings bonds and Treasury securities from the U.S. government. That’s up about fivefold from 2021, when investors opened 689,369 accounts on the site.

The spike in investor interest in the website coincides with a couple of key market events.

I bonds

First, savers turned toward Series I savings bonds, an inflation-protected and largely risk-free asset that’s issued by the federal government. The rate on these bonds has two components: a fixed rate of interest and a rate that varies based on inflation.

In May 2022, the Bureau of Fiscal Service announced that I bonds purchased from then through Oct. 28 of that year would earn a composite rate of 9.62% for the first six months after the date of issue. Bonds issued between Nov. 1, 2022, and April 30, 2023, have a rate of 6.89% — which is still attractive, even if it’s lower than last year’s bonanza.

Be aware that individuals buying I bonds through TreasuryDirect are limited to $10,000 in purchases per calendar year. You can buy up to $5,000 in paper I bonds using your tax refund.

Be sure you’re comfortable with tying up some of your funds in an I bond. Though you can cash it in after 12 months, you’ll lose the last 3 months of interest if you redeem it in fewer than five years.

Rising Treasury yields

Here's why some investors think the Fed will change its rate hike plans

The Federal Reserve’s rate hiking campaign, which began a year ago, spurred a rise in bond yields. Though this was bad news for people with diversified portfolios – they saw price declines in both fixed income and equities – it was good news for income-focused investors who wanted to buy Treasury securities on the cheap.

Indeed, the yield on the 10-year Treasury started 2022 around 1.5%, but surged to 4% by that fall. The inversion in the yield curve – an event in which yields on near-dated bonds are higher than long-dated issues – has also made Treasury bills especially promising. Consider that a 6-month T-bill has a yield of 4.91%.

Investors can ladder T-bills to extract a little more yield out of otherwise idle cash.

Aside from buying Treasurys through a brokerage firm, you can go directly to TreasuryDirect.gov.

There, you set up an account, link your bank and participate in an auction for Treasurys. Four-week, 8-week, 13-week and 26-week T-bills are auctioned every week. Two-year notes are auctioned monthly and 10-year Treasurys are auctioned every quarter.

Though these bonds are offering attractive yields and are deemed risk-free, investors should be aware that their yield may not keep pace with inflation. They might also miss out on investment opportunities in stocks, so be wary of how much you stash in these government bonds.

–CNBC’s Michelle Fox contributed to this story.         

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Regional bank shares fall as Fed persists with rate hikes despite industry turmoil

First Republic Bank headquarters is seen on March 16, 2023 in San Francisco, California.

Tayfun Coskun | Anadolu Agency | Getty Images

Regional bank stocks spiraled lower Wednesday as investors weighed the Federal Reserve’s latest interest rate hike and commentary about the health of U.S. financial institutions.

The SPDR S&P Regional Bank ETF (KRE) closed down 5.7%. It reached a new session low during Fed Chair Jerome Powell’s press conference and then took another leg down in the final half hour of the trading day. First Republic Bank ended down 15.9%, while PacWest Bancorp slid 17.1%.

The fate of regional banks has been in question since the closure of Silicon Valley Bank sparked a broader industry crisis. First Republic and PacWest have dropped 89.2% and 63.5%, respectively, since the month began, pulling the KRE down 29.4% over the same period.

Wednesday’s drops come on the back of the Fed’s decision to implement a quarter percentage point interest rate hike, while Fed projections signaled there will only be one more hike this year.

The Federal Open Market Committee said in its statement that the U.S. banking system was resilient, while noting recent turmoil could impact the economy.

“The U.S. banking system is sound and resilient,” the FOMC said in its statement. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.”

Powell said during his press conference that the weaknesses seen in Silicon Valley Bank were not apparent in the broader sector. He also said deposits in the banking system have stabilized over the last week.

“What I’m saying is you’ve seen that we have the tools to protect depositors when there is a threat of serious harm to the economy or to the financial system, and we’re prepared to use those tools,” Powell said. “I think depositors should assume that their deposits are safe.”

Adding to the drop in regional bank shares were comments from Treasury Secretary Yellen, who told the U.S. Senate appropriations subcommittee that the U.S. was not currently working on “blanket insurance” for bank deposits.

First Republic shed nearly 70% last week as investors grew increasingly skittish despite a pledge from a group of banks’ to inject $30 billion in deposits into it. The move was meant to be a sign of confidence, but First Republic is weighing additional steps. CNBC reported Monday that JPMorgan was advising the bank on plans to help it including a capital raise or sale.

PacWest said Wednesday that it had lost more than $6 billion in deposits as the future of midsized banks were questioned in recent days. But the bank said it did not have plans to raise more capital. Despite Wednesday’s slide, PacWest is still up 9.1% since the start of this week.

Treasury Secretary Janet Yellen said Tuesday that the government was willing to take further action to assure that deposits were safe, including backstopping if there were any risks of contagion.

— CNBC’s Jesse Pound contributed to this report

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ZURA Stock Alert: Low-Float Zura Bio Rockets 300%

One of today’s biggest market sensations is Zura Bio Limited (NASDAQ:ZURA). The clinical-stage biotechnology firm recently completed a merger with JATT Acquisition Corp, a special-purpose acquisition company (SPAC). Following a successful shareholder vote on March 16, ZURA stock began trading on the Nasdaq yesterday.

The newly formed company made its trading debut on Tuesday, March 21, and closed the day down 11%. Since then, however, it has truly skyrocketed, rising more than 300% despite multiple trading halts being imposed by the Nasdaq. However, the stock also boasts a surprisingly low float of roughly 5 million shares, causing some investors to eye it with skepticism.

What’s Happening With ZURA Stock

It’s not unusual for a newly merged deSPAC to enjoy impressive gains after its initial public offering (IPO). Additionally, companies that go public through a SPAC merger can sometimes have a low float percentage. Today, speculative investors have been closely watching ZURA stock as it shoots up. However, some have expressed concern regarding a shareholder disclosure. Per the company’s 8K filing:

“As a result of a a share distribution by Hana Immunotherapeutics LLC (“Hana”), Hana will own 5,404,274 Class A Shares of the post-combination company. Willow Gate LLC (“Willow”) will own 2,702,623 Class A Shares and Stone Peach Properties LLC (“Stone Peach”) will own 2,701,543 Class A Shares. The shares held by Willow and Stone Peach will not be subject to the lock-up restrictions.”

As two key investors are not facing a lock-up period, they have nothing stopping them from offloading their ZURA stock holdings. Were they to start selling, the stock would fall, but it would also lead to a higher float percentage.

This shouldn’t necessarily be seen as an indication of how ZURA stock will perform in the long term. Seeking Alpha reports that Zura is currently undergoing clinical testing for two drug candidates that treat disorders, including alopecia areata, diabetes, and asthma. The current “biotech gold rush” means there will be plenty of opportunities for new companies in the space.

On the date of publication, Samuel O’Brient did not hold (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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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7 Established Stocks That Are Poised for Growth in 2023

The tech industry continues to hand out pink slips to employees as the threat of a recession grows every day. Yet, despite the clouds in the distance, investors continue to debate whether it’s wiser to buy stocks that are poised for growth or ones brimming with value. 

As CNBC contributor Bob Pisani sees it, value and growth are often grouped together. He cites Microsoft (NASDAQ:MSFT) as a classic example. Standard & Poors calls it both. And the index publisher classifies ExxonMobil (NYSE:XOM) as purely a growth stock. XOM was a cash flow gusher the past two years, but it’s hardly what most people classify as growth. Heck, it sells a product that one day could be no more.

In 2023, the iShares S&P 500 Value ETF (NYSEARCA:IVE), which tracks the performance of the S&P 500 Value Index, is up 0.3%. The iShares S&P 500 Growth ETF (NYSEARCA:IVW), which, you guessed it, tracks the performance of the S&P 500 Growth Index, is up nearly 5.3%. In other words, growth is back, baby.

However, I’m looking for established stocks to buy that are poised for growth in 2023. To make my list, a stock must be held by IVW, founded in the 20th century, and expected to grow revenue and profits by 10% or more in the year ahead. 

NVDA Nvidia $264.68
UNH UnitedHealth Group $475.52
V Visa  $220.04
DE Deere & Co. $394.97
PGR Progressive $136.69
INTU Intuit $414.21
SBUX Starbucks $99.12

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) makes the cut. The stock is IVW’s third-largest holding, was founded in 1993, and is estimated to grow revenue and earnings per share by 10% and 34.4%, respectively, this year. 

I’ve been a big fan of Chief Executive Officer (CEO) Jensen Huang. In September 2021, I called Huang America’s most influential CEO. The stock might be down from its late-2021 highs, but Huang continues to make the right moves for the company’s long-term growth.

Huang spoke about artificial intelligence (AI) at the company’s GTC 2023 conference this week. In addition, Nvidia issued several press releases regarding AI on March 21. 

“The warp drive engine is accelerated computing, and the energy source is AI,” Huang said in his keynote at the company’s GTC conference. “The impressive capabilities of generative AI have created a sense of urgency for companies to reimagine their products and business models.”

Huang suggested that AI is this generation’s iPhone moment. I think he’s right.

UnitedHealth Group (UNH)

UnitedHealth Group (NYSE:UNH) is the IVW’s seventh-largest holding, was founded in 1977, and has revenue and EPS growth estimates of 11% and 12.4%, respectively, for this year. 

UnitedHealth rightfully calls itself a “health care and well-being company” because it does much more than provide health insurance for millions of people in the U.S. and elsewhere. 

In 2022, it generated revenue of $182.8 billion, 17.5% higher than a year earlier, with $14.1 billion in earnings from operations, also up 17.5% from a year earlier. 

The company’s Optum Insight reporting segment provides software and data analytics to health plans to help them navigate the complexities of the healthcare system. At the end of December, the division’s order backlog was $30 billion, of which $16.8 billion would be generated in 2023. 

Unsurprisingly, 22 out of 26 analysts covering the stock have an “overweight” or “buy” rating on it with an average target price of $597.96. That’s 26% above where it’s currently trading. 

Visa (V)

Visa (NYSE:V) is the IVW’s 10th-largest holding. Its underpinnings began in 1958, although Visa Inc. wasn’t officially created until 2007. Analysts are calling for revenue growth of 10.4% this year and EPS growth of 12.5%. 

In early March, the Ontario Teachers’ pension — one of Canada’s largest public service pension funds — filed its 2021 annual report. It’s a good idea for investors to examine these reports. They’re chock-full of interesting details. 

The pension fund revealed that it initiated a position in Visa, buying 2.2 million shares in the fourth quarter. That’s a sign that the fund likes where the financial services company is headed. 

And how could you not? V stock is up nearly 90% over the past five years, 33 percentage points higher than the S&P 500. So in good times and bad, it’s a fintech to own.

Deere & Co. (DE)

Deere & Co. (NYSE:DE) is the IVW’s 32nd-largest holding. It was founded in 1837 by John Deere, and this year’s revenue and EPS growth estimates are 13.5% and 31.1%, respectively. 

The company delivered fiscal Q1 2023 earnings in February that were off-the-charts good. Analysts expected sales of $11.28 billion and EPS of $5.57. Revenue came in at $11.4 billion, while earnings beat by 98 cents a share. 

Things are so good the company raised its earnings expectations for 2023 from $8.25 billion at the midpoint of its guidance in November to $9 billion. You don’t see too many names among IVW’s holdings upgrading their guidance like that. It’s a sign of more good things to come.

“‘Solid start to fiscal year 2023,’ wrote Baird analyst Mig Dobre in a Friday report. This ‘is the year we’ve been waiting for as the supply chain is starting to allow for sizable production increases while the positive price/cost gap reaches a decade-plus high,’” Barron’s reported. 

Analysts generally like DE with 18 “overweight or “buy” ratings, eight “holds” and zero “sells.”

Progressive (PGR)

Progressive (NYSE:PGR) is IVW’s 42nd-largest holding. It was founded in 1937 in Cleveland, and its revenue and EPS growth estimates for this year stand at 17.7% and 44.8%, respectively. 

Morningstar senior analyst Brett Horn has a love-hate relationship with Progressive. On the one hand, he considers it an excellent company, possessing “one of the strongest franchises in the insurance industry.” On the other hand, he notes it’s an expensive stock “trading well above our $99 fair value.”

With shares trading at nearly $137 currently, I can see why he’s hesitant. However, sometimes you have to pay more for quality. 

If you are a dividend investor, you should be interested in the company’s dividend policy. Progressive pays a quarterly dividend of 10 cents per share for a forward annual yield of 0.3%. However, it also pays a variable dividend, which is at the board’s discretion. In 2022, it passed on paying out a variable dividend, opting to invest the funds in growth initiatives. In 2021, however, it paid out $5.90 in variable dividends, and it paid out $2.25 in 2020 and $2.41 in 2019.

Between 2019 and 2022, the company paid out $12.26 in total dividends. That’s an average of $3.06 a year for an attractive 2.2% yield. 

Intuit (INTU)

Intuit (NASDAQ:INTU) is the ETF’s 53rd-largest holding. It was founded in 1983, and its 2023 revenue and EPS growth estimates are 11.3% and 16.5%, respectively.

Let’s face it; there are no bigger couple of words in business today than artificial intelligence. Bill Gates says so. And he’s a pretty smart dude. 

“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the internet, and the mobile phone,” Gates stated on his blog. 

Intuit CEO Sasan Goodarzi is focused on getting his entire headcount AI-literate. The idea is that the whole company works to possess transferable skills across its many departments, including IT. By creating a culture of learning, Intuit will be fully equipped for the AI future.

As Goodarzi stated in the company’s Q2 2023 conference call, the company has five big bets: “revolutionize speed to benefit, connect people to experts, unlock smart money decisions, be the center of small business growth and disrupt the small business mid-market.”    

You’ll notice that the first one is directly related to AI. That’s excellent news if you’re a long-time shareholder.

Starbucks (SBUX)

I didn’t think I’d have to go to the 55th company in IVW to get my seventh selection. That tells you all you need to know about the growth prospects for S&P 500 companies in 2023. They’re not good in the eyes of analysts. 

Starbucks (NASDAQ:SBUX) was founded in 1971, and its 2023 revenue and EPS growth estimates are 11.4% and 14.9%, respectively.

The company moved up its plan to move Laxman Narasimhan into the CEO chair two weeks early, announcing on March 20 that Narasimhan was now in charge. Narasimhan was formerly CEO of Reckitt Benckiser Group (OTCMKTS:RBGLY) for over three years. Before that, he held executive positions with PepsiCo (NASDAQ:PEP) and was a consultant with McKinsey. 

Starbucks was recently named the most-valuable restaurant brand in the U.S. for the seventh consecutive year. It constantly does an excellent job of reinventing itself. As a result of that hard work, it has a 10-year annualized total return of 14.5%, 244 basis points higher than McDonald’s (NYSE:MCD).      

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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XELA Stock Is on a Road to Nowhere

XELA stock - Exela Technologies Stock Is on a Road to Nowhere

Source: Golden Dayz / Shutterstock.com

No matter how bad the situation gets with Exela Technologies (NASDAQ:XELA) stock, some enterprising financial traders might hope for a miraculous recovery. As the old saying goes however, hope isn’t a viable investment strategy. Sure, Exela is trying a few tactics, but the company’s financial problems have become unmanageable.

Exela Technologies might sound like a high-conviction business at first glance. The company, which is based in Texas, specializes in business process automation (BPA). Since automation and artificial intelligence are top-of-mind on Wall Street, one could expect Exela to thrive in 2023, but that doesn’t mean it will.

Sure, the “bot revolution” is in progress and maybe Exela Technologies is part of this trend, but it can’t prosper if it’s digging a deep financial hole. So, cautious investors should think about staying away from XELA stock this year.

XELA Exela Technologies $0.046

Cost-Cutting and New Funding Won’t Help

Exela Technologies is trying some of the oldest tricks in the book to shore up its finances. Ultimately, these tactics will probably be too little, too late for the company.

For instance, Exela Technologies proudly announced several cost-reduction measures. Among the company’s plans are “headcount optimization” and “real estate reduction.” Hence, Exela will have to operate with fewer workers and less space, which won’t be easy. The company expects to achieve savings of $65 million to $75 million this year.

Another old trick is to get a quick capital inflation as debt. Recently, Exela Technologies disclosed $51 million worth of new funding. Don’t assume that this is free money, though.

It’s really just an addition to the company’s debt load. The funds from Exela’s “new securitization facility” will have to be paid back with interest.

XELA Stock Investors Have Numerous Problems to Worry About

Exela Technologies’ most recently published Form 10-Q revealed that the company had around $1.1 billion worth of total debt. Thus, $51 million of new funding (which will have to be repaid with interest) and $65 million to $75 million of cost-cutting won’t make a big enough difference.

Meanwhile, XELA stock has fallen very far, very fast. The Nasdaq exchange has already sent Exela multiple noncompliance notices. The exchange could delist the stock because it has closed below $1 for a prolonged period.

To remedy this situation, Exela Technologies is using the same old playbook that many other troubled businesses have used. The company disclosed that Exela’s shareholders will vote on a proposed reverse stock split.

This potential reverse share split would be “at a ratio in the range of 1-for-100 to 1-for-200.” It’s a quick fix that won’t actually improve Exela Technologies’ fundamentals, and some people will see it as a sign of desperation.

What You Can Do Now

Exela Technologies is unprofitable and is adding to its debt burden. Plus, the company is reducing its costs, but this probably won’t be enough to fix Exela’s financial issues.

Finally, Exela Technologies’ proposed reverse share split might help the company avoid an immediate delisting, but that’s not a permanent solution. All in all, there are many problems for prospective XELA stock investors to consider, and they should look for other technology businesses to put on their watch lists.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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