The Top 7 Stocks to Watch in 2023

A bull-bear battle is starting to materialize in the stock market, and I believe that the struggle will intensify in early 2023. Bears believe that we’re heading for a steep recession and a horrible macro environment for stocks, and many of them are looking for unprofitable growth equities to short. On the other hand, bulls are looking for bargains and starting to buy, buying growth stocks that they think will break out at some point next year. Some of the most exciting stocks to watch in 2023 are those over which the bulls and bears are fighting.

Other names are important to watch because their fates will provide important indications about the direction of certain important sectors.
I believe that, before the end of next quarter and possibly by the end of the upcoming earnings season, the bulls will start winning the battle. With that said, here are seven crucial stocks to watch in 2023:

NXP Semiconductors (NXPI)

NXP Semiconductors (NASDAQ:NXPI) primarily focuses on making chips used by industrial companies and automakers.

The shares have held relatively low during the recent tech downturn, dropping about 12% from their early December highs. That indicates that the bulls are buying the stock on dips, thwarting bears’ efforts to drive the stick further down. Nearly 5.5 million shares of the stock, representing around $750 million of value, were sold short as of Dec. 15.

A rally by NXPI stock next quarter and a solid Q4 report by the chip maker on Jan. 30 will have positive implications for the shares of other companies that sell technology for automobiles. Among the stocks in the latter category are Aptiv (NYSE:APTV), BlackBerry (NYSE:BB), and Nvidia (NASDAQ:NVDA). Strength by NXPI stock in the wake of its Q1 results would also bode well for automakers and other chip makers whose semiconductors are primarily incorporated into products used by industrial firms.

Among the names in the latter sector are ON Semiconductor (NASDAQ:ON) and Marvell Technology (NASDAQ:MRVL).

Tesla (TSLA)

As Tesla’s (NASDAQ:TSLA) stock has plunged in the last couple of weeks, I’ve noticed that the shares of many other electric-vehicle makers and clean-energy companies have also tumbled. Conversely, on Dec. 28, when TSLA stock broke its seven-day losing streak, many EV makers and solar stocks outperformed.

For example, on Dec. 28, a day that the Nasdaq sank 1.35%, Rivian (NASDAQ:RIVN) and Plug Power (NASDAQ:PLUG) were flat, while Lucid (NASDAQ:LCID) advanced 2.9%. During Tesla’s losing streak, those companies and their peers usually drastically underperformed the Nasdaq. Therefore, if Tesla can rally, many EV makers and clean-energy names will probably surge on its coattails. Conversely, if Elon Musk’s firm continues to falter in 2023, it will be a long, tough year for those firms.

There are many reasons to believe that Tesla will make a comeback next quarter. In the U.S., its EVs will benefit from a new $7,500 tax credit, and in China, the economy and auto sales will likely be boosted by the country’s reopening.

Meanwhile, the automaker stated that its factory workers in China would be getting nine days off for Chinese New Year, representing a day longer than their usual break for a holiday, versus the 17 days that Reuters had previously reported that the plant would be closed. The extra day’s vacation likely represents a gesture to the workers (who had to live at the factory during parts of the last two years because of Covid restrictions) rather than reflecting any downturn in demand for Tesla’s EVs.

And as I’ve written in past columns, the Tesla Semi looks poised to generate big sales because it saves companies a great deal of money, while the valuation of TSLA stock is so much more reasonable now than it has been in past years.

Plug Power (PLUG)

Plug Power is building plants that produce “green” hydrogen and currently gets a significant portion of its revenue from fuel cells that power vehicles used in warehouses, such as forklifts. PLUG is also starting to sell electrolyzers that make green hydrogen, and it’s partnering with European automaker Renault to develop hydrogen-powered vehicles.

Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) have already agreed to buy large amounts of “green” hydrogen from Plug. Just two weeks ago, PLUG unveiled a deal to supply green hydrogen to hydrogen truck maker Nikola (NASDAQ:NKLA). The announcement significantly boosted PLUG stock and many clean energy and electric-vehicle stocks, but PLUG and its peers were subsequently dragged back down by the market’s malaise and fears about Tesla.

At the beginning of each year, PLUG traditionally unveils one or more major partners or customers. With the company due to present at Goldman Sachs’ Energy Conference in the first week of January, Plug could announce the news that will boost PLUG stock and other clean energy companies, as well as EV makers.

Further, Plug Power has said that it expects its margins to improve throughout the year as its green hydrogen production ramps, and its joint venture with Renault is expected to start delivering vehicles in 2023. Additionally, PLUG, like TSLA, is expected to get a big lift from new tax credits that will kick in starting in January. Those developments could also boost PLUG stock and the names that trade with it.

Shoals (SHLS)

Another battleground name in the clean energy sector, Shoals (NASDAQ:SHLS), markets equipment used in solar-energy systems. Investor’s Business Daily gives SHLS a very high Composite Rating of 93, with an extremely elevated Relative Strength, or RS, rating of 94. The RS score measures a stock’s performance versus that of the entire market over the last year.

Before the market in general and TSLA stock in particular weakened in the middle of December, SHLS stock was rallying sharply, as it surged 18% between Dec. 7 and Dec. 15, reaching $28.15. The latter price was about 15% below its 52-week high of $32.43. If the market and the clean-energy sector rebound next year, there’s a good chance that SHLS will be off to the races once again.

Like TSLA and PLUG, SHLS is expected to get a big lift from new tax credits that will kick in starting next month. In Shoals’ case, higher tax credits for solar energy should boost the demand for its products in the U.S. Meanwhile, and the company should also get a lift from the EU’s tremendous efforts to increase its utilization of solar energy.

Xpeng (XPEV)

Xpeng (NYSE:XPEV) stock was really soaring before the mid-December downturn, as the shares of the Chinese electric-vehicle maker climbed nearly 70% in just a few days between Nov. 20 and Dec. 2. I attributed the jump to optimism about the automaker’s new, high-end SUV, the G9, along with bullishness on its autonomous-vehicle initiatives.

During Xpeng’s third-quarter earnings conference call, held on Nov. 30, its CEO, He Xiaopeng, expressed his belief that the EV would “soon” be among the three best-selling, high-end electric SUVs in China. On the autonomous front, He noted that the automaker intends to introduce its “full-scenario advanced driver assistance product” in the third quarter of 2023, and the G9 is undergoing self-driving tests on “public roads.” The CEO stated that “we plan to be the first to realize autonomous driving with cost-effective mass-produced vehicles.”

Strong sales of the G9 and major strides in autonomous driving could easily make XPEV stock a big, rapid winner once again in 2023.

Bionano (BNGO)

Bionano (NASDAQ:BNGO) is another battleground stock that saw a huge rally thwarted by the market’s mid-December malaise and, I believe, by a determined effort by short sellers. It is worth noting that, as of Dec. 15, nearly 50 million of the 291 million BNGO stock were being shorted.

The shares surged from $1.90 on Nov. 29 to $2.21 on Dec. 12. During that time period, the trading volume of BNGO stock tended to be much higher than average. For example, on Dec. 6, the shares jumped 8% to $2.16 on a trading volume of nearly 17 million, well above their average volume over the last three months of 7.69 million. Starting on Dec. 12, the stock began to decline on above-average trading volume.

The high volumes, together with the sharp moves, indicate a tug-of-war between longs and shorts was going on during the first few weeks of this month, with bulls winning in the first half of the struggle and bears emerging victorious in the latter half.

As I noted in a recent article, “Studies continue to highlight the ability of Bionano’s optical genomic mapping (OGM) tools to greatly advance scientific research and help enhance the condition of a multitude of patients.” Moreover, the Center for Medicare and Medicaid Services has started to reimburse insurers for certain uses of Bionano’s Saphyr tool, which analyzes DNA’s structural variations.

As Saphyr continues to prove that it can greatly enhance scientists’ research of diseases and save many lives and as more insurers agree to reimburse scientists and healthcare professionals for the use of Saphyr, Bionano’s financial results should greatly improve in 2023. As a result, the bulls will probably start emerging victorious again.

MGM Resorts (MGM)

MGM Resorts (NYSE:MGM) stock has been relatively resilient during the market’s recent downturn, falling 13% from its Dec. 15 close of $37.64.

The casino owner is the best, purest player in Las Vegas in the stock market, and Vegas is expected to get a big boost this year from the resumption of business travel, in-person conferences, and international travel. MGM should benefit tremendously financially from all of those developments.

Additionally, in March, Sin City will host the NCAA basketball tournament and a major NASCAR race. Also importantly, MGM expects its sports-gambling joint venture, BetMGM, to become profitable in 2023. Additionally, Barry Diller, who has successfully turned around many companies, has a 16.5% stake in MGM stock.

With all of these strong, positive catalysts and with MGM stock changing hands at a trailing price-earnings ratio of just 112, MGM is definitely one of the most exciting stocks to watch.

On the date of publication, Larry Ramer held long positions in PLUG,BB, SHLS, BNGO, XPEV, and MGM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.