Most investors will be more than happy to say goodbye to 2022, as the S&P 500, barring a massive rally to end the year, will end up with the worst return for the index since 2008. While not nearly as bad as the Nasdaq, it has still been a brutal year across every sector, with the exception of energy. While 2023 is likely to be better because at some point during the year the interest rate increases likely will end, the question is which stocks are set to rebound.
A new Goldman Sachs research report notes that buying 2022 laggards could be the way for some big 2023 gains, if history is any guide. The report noted this:
Over the past 20 years, there has been a tendency for calendar-year laggards to outperform in the subsequent first quarters. This trend has held up in 13 of the 20 years since we started tracking the data, with laggards generating an average outperformance of 1.4% vs. the S&P 500 in the subsequent first quarter, and 53% of laggards outperforming in the subsequent first quarter. The outperformance has been more pronounced in the last two years, with 1Q of 2021 seeing record prior year laggard outperformance (+13.2% vs. the SPX and 80% hit rate), and 1Q of 2022 seeing the 3rd highest outperformance and hit rate over the last two decades.
Fifteen stocks emerged as some of the best ideas the Goldman Sachs team circled, and we screened that list for top technology names, as the sector has been crushed. Five look like outstanding ideas now. Of course, while all are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Adobe
This large cap legacy technology stock has been cut in half over the past year. Adobe Systems Inc. (NASDAQ: ADBE) operates as a diversified software company worldwide. It operates through three segments.
The Digital Media segment offers products, services and solutions that enable individuals, teams and enterprises to create, publish and promote content. Its Document Cloud is a unified cloud-based document services platform. The company’s flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, workers, marketers, educators, enthusiasts, communicators and consumers.
The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers and executives across the C-suite.
The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development and high-end printing, as well as Advertising Cloud offerings.
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