Stocks rose sharply to close out the week, following an encouraging jobs report as investors consider its possible implications on future Fed moves. Friday’s rally left the major indexes (which started the session negative for the week) with a weekly gain to open the new year. The S&P 500 and the Nasdaq snapped three-week losing streaks, with gains of 1.5% and 1%, respectively. Meanwhile, the Dow stacked on around 1.5%.

January’s stock market performance has historically been a reliable indicator of what could be in store for the rest of the year. In fact, according to S&P Dow Jones Indices, 71% of the time since 1929, the S&P 500 has posted a positive return for the year after moving higher in January or, conversely, has gone on to post an annual loss when the market has declined in January.

As major banks prepare to kick off earnings season this week, analysts have been dialing back their expectations. Over the past three months, analysts reduced their Q4 EPS estimates for companies in the S&P 500 by an average of 6.5%, according to FactSet. That figure far exceeds the 3.8% average reduction seen before earnings seasons over the past 20 years. JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and BlackRock are scheduled to report on Friday. Other major companies, including Taiwan Semiconductor Manufacturing Company, UnitedHealth Group, and Delta Air Lines, will also report quarterly earnings next week. 

A logical move in uncertain times is dividend stocks, which pay you to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow. The most desirable dividend stocks have a history of raising payouts over time as the company’s profits grow. Our first of three stock recommendations for the week ahead is a ticker with solid upside potential and tremendous dividend income potential.   

Pioneer Natural Resources Company (PXD) has long viewed sustainability as a balance of economic growth, environmental stewardship, and social responsibility. Its emphasis is on developing natural resources in a manner that protects surrounding communities and preserves the environment.

In the wake of the pandemic, when energy prices were, cheap PXD struck an almost perfectly timed agreement to buy fellow Permian Basin producer Parsley Energy for $4.5 billion. If you’re wondering how PXD managed to finance that transaction, the answer lies in the fact that it was an all-stock deal that ensured Pioneer didn’t have a new giant debt load hanging over its head. The fact that Parsley operated primarily in the same region of West Texas, where Pioneer had both expertise and existing staff, has paid off over time.   

That deal was a coup for Pioneer shareholders, built on the fact it was large and well-capitalized at a time when stressed and debt-reliant shale plays were looking for a white knight. On top of that acquisition, PXD also boosted its dividend by 25% at the start of the year as further evidence of its strong balance sheet.

Investors can look forward to upcoming tailwinds, including Pioneer’s recently announced partnership with the world’s largest renewable energy producer, NextEraEnergy (NEE), to develop a 140-megawatt wind generation facility on Pioneer-owned land. The project will supply the company’s Permian Basin operations with low-cost, renewable power and is expected to be operational next year.  

In the third quarter, revenue was up 22% YOY to $6.09 billion, smashing the consensus estimate of 4.57 billion. The company reported earnings of $7.48 per share, beating consensus expectations of $7.27 per share. In 2022, the company has rewarded its investors handsomely with $20.73 per share through its generous 10.78% cash dividend. Chief Executive Officer Scott D. Sheffield stated, “Pioneer continues to execute on our investment framework that provides best-in-class capital returns to shareholders. This framework is expected to result in $7.5 billion of cash flow being returned to shareholders during 2022, including $26 per share in dividends and continued opportunistic share repurchases.”

Even after gaining 33% over the past year, Pioneer shares likely still have valuation upside in addition to their tremendous dividend income potential.   

Taiwan Semiconductor (TSM), also known as TSMC, is at the top of the list when it comes to the semiconductor manufacturing group. The company makes chips for the likes of AMD (AMD), Nvidia (NVDA), and Qualcomm (QCOM), and it’s a key chip supplier to Apple (AAPL).  

After hitting a two-year low due to a sharp slowdown in global chip demand, TSM’s share price jumped when Berkshire disclosed its more than $4.1 billion position in the stock. Still down more than 40% from its January 2021 peak, anyone on the sidelines might consider now an appropriate time to strike. “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, who is bullish on Berkshire Hathaway and TSM.  

U.S. investors have been cautious when betting on the Taiwan-based chipmaker as it would lose all Western contracts in the event of a Chinese takeover of the island. However, the company is working to reduce its geopolitical risk with a new $40 billion foundry in Arizona, expected to be operational by 2024. The investment has Washington’s support as it comes amid a U.S. push to boost domestic supplies of semiconductors and Congressional passage of the $52 billion CHIPS and Science Act. 

Taiwan Semi reported $1.79 per share earnings from $20.23 billion in revenue in the third quarter, surpassing consensus expectations of $1.41 EPS from revenue of $19.96. Management reiterated its outlook of Q4 revenue in the range of $19.9 billion to $20.7 billion. The gross profit margin is expected to be between 59.5% and 61.5%. The operating profit margin is expected to be between 49% and 51%.  

TSM has a 90% Buy rating from the 38 analysts offering recommendations and zero Sell ratings. Anyone on the sidelines may want to consider striking up a position in this stock ahead of the company’s earnings call, slated for Thursday, January 12th.  

U.S.-based Trulieve Cannabis (TCNNF) stands out as one of the few cannabis companies that have been able to turn a steady, meaningful profit, with four years of consistent quarterly profitability under its belt. That is, up until its most recent quarter, when the company reported a net loss on the bottom line of $22.5  million, compared to the net income of $40.9 million reported for the previous year’s quarter. However, much of the loss can be attributed to one-time charges related to Trulieve’s recent acquisition of Harvest & Recreation Health. The quarterly net loss came in at around $1.1 million without the one-time charges.  

While the company’s recent loss might be looked at as a step in the wrong direction, it’s common to see this following a significant acquisition. Trulieve’s cannabis revenue has been following a steady upward trajectory since well before the acquisition took place. During the second quarter, revenue increased by 49% year over year to $320.3 million. 

The company has been steadily expanding operations, nearly tripling in size over the past few years. Since June 2020, when it had just 52 dispensaries, all located in Florida, the company operates 177 market-leading dispensaries throughout 11 states. It has successfully done so to preserve its position as a major player in this increasingly competitive market.

Trulieve Cannabis garners a 100% Buy rating from the 18 analysts offering recommendations. A median price target of $28.71 represents a 169.62% upside. TCNNF is one of the best picks to profit from the cannabis opportunity. 

Stocks posted a negative week and losing month to close out the worst year that the market has seen since 2008. The three major stock indexes snapped a two-month string of gains. The Nasdaq fell nearly 9% in December, the S&P 500 dropped almost 6%, and the Dow pulled back around 4%.  

After posting gains in the three previous years, the market turned sharply negative in 2022. For the year, the S&P 500 finished down 18.1%. The Dow’s setback was comparatively modest at 6.9%, while the Nasdaq lagged with a 32.5% decline. 

In the holiday-shortened week ahead, investors can expect an update on the labor market due out on Friday. The release covering December follows a report that showed the economy generated 263,000 new jobs in November—the fourth consecutive month with jobs gains in the 200,000 to 300,000 range and the 23^rd month in a row with at least 200,000.

The stock market just wrapped up its worst year in decades. But every cloud has its silver lining. Eventually, every bear market throughout history has represented an opportunity for patient investors looking to pick up shares in desirable names at bargain prices. The question isn’t “if” you should be looking for stocks to buy, but which stocks to buy. This list will cover three tickers to consider in the weeks ahead.  

Cyclical stocks had a tough time in 2022, but 2023 could be a banner year for growth stocks as inflation cools and the Fed eventually finishes the rate hiking cycle. One notable growth name that got hammered in 2022 is Meta Platforms Inc. (META). The stock currently trades at its cheapest level at less than 17x forward earnings, and it may have further to fall. Still, with the most prominent family of apps and 4 billion users worldwide, META’s recovery could be swift when tech turns around. 

Meta was once one of the world’s most valuable companies and is considered one of the Big Five American information technology companies, alongside Alphabet, Amazon, Apple, and Microsoft. As of 2022, it is the least profitable of the five and has fallen from the list of the top twenty biggest companies in the United States. The company owns Facebook, Instagram, and WhatsApp, among other products and services. In October 2021, the parent company of Facebook changed its name from Facebook, Inc., to Meta Platforms, Inc., to “reflect its focus on building the metaverse.”  

The metaverse is still in its embryonic stages. Still, an increasing number of market participants are jumping in on the companies they believe will lead the way into this fantastic new internet iteration. For investors who want to get in the door now, pioneering META seems like a good choice, especially since its price has been slashed more than 66% over the past year.

A weakening ad market has been apparent as prices have risen across the board. Regulatory troubles, layoffs, and management changes have intensified the pain for META this year. But as inflation cools, Meta’s commercial ad spend seems likely to recover as soon as the second half of 2023.   If investors should be greedy when others are fearful, this may be the perfect time to scoop up shares of the social media giant.  

Of 58 polled analysts, 38 recommend buying META stock, while 19 rate the stock as a Hold, and only 1 rate it as a Sell. A median price target of $145 represents an increase of 21% from Friday’s closing price.  

One of the hardest hit sectors of the year, real estate, has been a bright spot in markets recently, thanks to fast-falling mortgage rates. According to bankrate.com, the national average for a 30-year fixed mortgage hit a high of 7.2% on November 11th and has since pulled back to around 6.5%. Homebuilders have benefited from the deep dive over the past week and should continue to do so as long as mortgage rates continue to lower. 

According to some Wall Street pros, we may have a “once-in-a-cycle opportunity” to cash in on the early-cycle outperformance phase of homebuilder stocks, begging the question – which home builders are best positioned in the lower-mortgage-rate environment?    

Companies likely to be best positioned are the largest-scale players. Our first recommendation for the week ahead is the number one home builder in America since 2002, D R Horton Inc (DHI).   Founded in 1978 in Fort Worth, Texas, D.R. Horton operates in 106 markets in 33 states across the United States and closed 83,518 homes in its homebuilding and single-family rental operations during its fiscal year ended September 30th, 2022. 

The company is engaged in the construction and sale of high-quality homes through its diverse brand portfolio, which includes Emerald Homes, Express Homes, and Freedom Homes, with sales prices generally ranging from $200,000 to over $1,000,000. It also provides mortgage financing, title services, and insurance agency services for its homebuyers through its mortgage, title, and insurance subsidiaries. 

In its most recent quarter, D.R. Horton missed analyst estimates for earnings and revenue due to the cooling housing market. From June to September 2022, the company’s total homebuilding lot position decreased by 25,000 lots. Still, the company has been actively managing the lot and land pipeline and investments in lots, land, and development to meet needs during this transition in the housing market. 

Impressive performance, industry-leading market share, a solid acquisition strategy, a well-stocked land supply, lots, and homes, and affordable product offerings across multiple brands are expected to drive growth. D.R. Horton’s earnings are expected to grow 1.7% in fiscal 2023. The stock has gained 24.9% over the past three months, outperforming the industry’s 19% rise. DHI stock has a solid Buy rating from the pros offering recommendations. A median price target of $95 represents an increase of 7% from Friday’s closing price. 

The airline industry has seen a remarkable recovery in 2022 thanks to increasing travel demand and consumers’ willingness to pay higher fares. With airline stocks currently trading at very low multiples, many long-term-minded investors are eyeing the group, wondering which of these beaten-down tickers is the most attractive value.

Delta Airlines (DAL), the second airline company to have joined the coveted S&P 500 Index, commands more than a 17% share of the domestic aviation market. As you would expect, most of the Atlanta-GA-based carrier’s revenues are realized from its airline segment. What might surprise you is that 10% of the $29.9-billion amount generated in 2021 came from the company’s refinery segment, which operates for the benefit of the airline division by providing it with jet fuel from its own production.

Fuel savings are crucial to a functioning aviation industry in this next chapter. From increasing costs to environmental impact, airlines have had plenty of reasons to save every bit of jet fuel they can. Delta recently revealed details of how its fleet renewal program has helped to save tens of millions of gallons of fuel.  

Last week, the airline heavyweight raised its Q4 and full-year 2022 guidance and forecast an upbeat 2023, driven by robust demand. The company now expects the fourth-quarter 2022 operating margin to be 11%. Management sees adjusted earnings per share in the $1.35-$1.40 range (the earlier outlook was in the range of $1-$1.25). For the full-year 2023, DAL expects 15-20% year-over-year revenue growth. Earnings per share and operating margin for 2023 are expected in the $5-$6 band and 10-12% range, respectively. 

Delta has been more conservative than some competitors in bringing back capacity, but the carrier aims to have its network restored to 2019 levels next summer. In the meantime, several competitors have had to cut routes and scale back on expansion plans as supply chain, and labor constraints have delayed the production of new aircraft. Airlines continue to struggle with labor shortages, but for Delta, bookings remain strong into early 2023.

Delta shares are currently very cheaply priced at less than 8 times earnings. The stock garners an 85% Buy rating on Wall Street. A median consensus price target of $45 represents a 37% increase from Friday’s closing price.