I have been thinking about what I will do with my share portfolio for next year. Here are eight shares I will consider buying in 2023. That is if I have spare cash and can get them at what I think is an attractive price.
Financial services
The outlook for the financial services sector seems mixed to me. On one hand, a worsening economy could lead customers to save and invest less, hurting profits. On the other hand, long-term demand is likely to be resilient.
I already own shares in asset manager M&G. But its current valuation looks attractive to me. I am also attracted by the yield close to 10%. If the price remains attractive, I may increase my position in 2023.
I am also keeping an eye on Lloyds Bank. For now, the risk of a tough economy hurting profits puts me off buying these FTSE 100 shares. But if next year brings signs of economic recovery and low loan default rates, I will consider adding the shares back into my portfolio.
Cyclical shares
Some shares are cyclical so buying them at or near the bottom of their economic cycle can be rewarding. But buying at the wrong moment can be costly, as lower revenues can lead to share prices tumbling.
I have been considering housebuilders like Persimmon for my portfolio this year but have not yet made a move. If the housing market looks like it has reached a bottom in 2023, I would consider buying Persimmon for my portfolio. If not, I will keep watching it. The same goes for miners like Rio Tinto.
Tobacco
I continue to think that tobacco shares can offer my portfolio good long-term value. With the highly cash generative nature of the business, tobacco companies tend to pay chunky dividends. In the FTSE 100, for example, British American Tobacco yields 6.6% and rival Imperial Brands 6.9%.
For now, both companies continue to increase their dividends, although in Imperial’s case that follows a big cut in 2020. The question is whether declining cigarette usage will eat into revenues and profits enough that the dividends are cut in the future.
Both shares have performed strongly in 2022. If their price is attractive next year though, I would consider buying them for my portfolio.
Retailers
I already own JD Sports in my portfolio. I continue to feel excited about the company’s long-term potential as its proven retail formula has helped profits grow strongly over the years. Its shares have been weak performers in 2022, but I think that retail formula still works. A recession could dent customer demand but, at the right price, I would be happy to increase my position.
I also would consider buying Tesco. In fact, I would be happy to add the FTSE 100 retailer to my portfolio right now if I had the spare cash to invest. A recession could hurt profits but, like JD, it has a strong market position and proven formula.
Tesco has been sliding in value during 2022 but has started to increase in the past couple of months. But if it gets too expensive, I will not buy. However, if I can buy the shares in 2023 at today’s price I would be happy to add them to my portfolio.
