CNBC’s Jim Cramer on Wednesday highlighted technology and real estate stocks that he believes may do well in 2023, after a dismal year for both sectors.
Rising interest rates presented challenges for the technology and real estate industries in 2022. Information technology is down 27% year-to-date as of Wednesday’s close, while real estate is down a 28.4% in the same section. The only worst-performing sectors in the S&P 500 are consumer discretionary, down 36.2%, and communication services, down 40.3%.
Cramer said he thinks technology and real estate will continue to struggle next year; however, technology may start to see its luck improve after the first half of 2023.
Tech Picks for 2023
oracle Q2 FY2023 Earnings last week they were “magnificent,” Cramer said. The stock sells for less than 17 times future earnings. While enterprise software isn’t Cramer’s favorite industry at the moment, he said Oracle’s business seems “very durable.”
Cramer said he likes Broadcom’s diversification strategy, including its pending deal to acquire VMware. Broadcom shares also have a dividend yield of around 3.3%, allowing investors to be patient while the acquisition goes through regulatory review, he said. The company also recently announced a $10 billion share buyback program.
Palo Alto Networks is not in the S&P 500. However, Cramer said he believes it is the best-run cybersecurity company operating in an industry that has long-term staying power in the digital age. While Palo Alto Networks reported better than expected results last monthCramer noted that the stock is not far off its 52-week closing low of $142.21 on Nov. 1. 4. “I recommend picking up a few right now here and maybe a few more in the weak,” he said.
Real Estate Picks for 2023
Cramer said he likes Realty Income because its major retail tenants, such as Dollar General, Walgreens and 7-Eleven, have businesses that can withstand a potential downturn. “Best of all, this company is a dividend machine; they pay a monthly dividend,” he said, “and they tend to increase it several times a year. Currently, the stock is yielding 4.6%.”
While Federal Realty shares are down about 25% in 2022, Cramer said the stock has performed solidly over the long term. Its current dividend yield is 4.25%. Cramer said Federal Realty’s specializes in mixed-use properties, many of which are in wealthy suburbs. That’s remarkable given concerns about a possible recession.
Cramer said the logistics-focused real estate investment trust, or REIT, has continued to do well even as its shares have fallen about 31% year-to-date. Cramer said he believes Prologis shares have fallen enough to start looking attractive.
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