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Warren Buffett’s flagship fund, Berkshire Hathaway, yielding an average return of 20% per year. So, beating the portfolio is a tough task. However, I have identified three stocks for me to buy and aim to beat them in 2023 and beyond.
1. easyJet
As the travel sector continues to recover, it should come as no surprise easyJet (LSE:EZJ) shares are up 40% this year. That stellar performance has outpaced Berkshire’s flat performance.
What makes easyJet a buy for me is the unrealized upside potential. Capacity still lags behind pre-pandemic levels. This means that there is still a large part of the market for FTSE 250 strong hold.
Couple that with a strong balance sheet and I believe it will facilitate strong, long-term growth by expanding our operations. After all, the new and growing Holidays segment has generated more revenue with increased profits.
More lucratively, the FTSE The stalwart is now trading at low multiples. JPMorgan and Liberium both have a ‘buy’ rating on the stock with an average price target of £5.80. This gives a rise of 20% from the current level. Even so, unprofitability for the time being can lead to investment risks.
| Metric | easyJet | Industry average |
|---|---|---|
| Price-to-book (P/B) ratio. | 1.4 | 1.8 |
| Price-to-sales ratio (P/S). | 0.6 | 0.9 |
| Price-to-sales ratio (FP/S). | 0.5 | 0.7 |
| Price-to-earnings ratio (FP/E). | 19.9 | 29.1 |
2. TSMC
Like many tech stocks in 2022, semiconductor foundry TSMC (NYSE: TSM ) is also suffering. Despite this, a strong rally could happen this year as the chip decline is expected to slow down before the second half of the year.
Either way, TSMC’s multiple is now at a multi-year low. Therefore, I believe this could be a one-time opportunity for me to buy shares at a discount, and look for a technological rebound in the medium term.
| Metric | TSMC | Industry average |
|---|---|---|
| Price-to-earnings (P/E) ratio. | 13.9 | 18.3 |
| Price-to-earnings ratio (FP/E). | 16.2 | 22.5 |
| Price-to-earnings growth (PEG) ratio | 0.2 | 1.2 |
The famous industrial chip of the foundry also makes it far away from the nearest competitor, giving it a strong moat. This is evident from a large client base that includes happy people Apple, AMDand NVIDIA.
Additionally, with a strong balance sheet, the chip maker plans to use capital to expand production and diversify risks by building more plants outside of Taiwan. Therefore, I see TSMC stock as one of Buffett’s biggest winners in 2023 and beyond. However, I must point out that the near-term headwinds may last longer than expected, and may cause TSMC stock to drop.
3. Pinterest
My last purchase will be Pinterest (NYSE:PINS). After falling from the peak of the pandemic, the social media company is making a comeback. In fact, the stock is up nearly 45% from the bottom.
This is due to the board’s decision to turn Pinterest into a hybrid social media/e-commerce platform. Strong user intent to purchase items while in the app has led to huge growth in shopping advertising revenue, with more potential to be realized through video content. And with a perfect balance sheet, it strengthens my investment case.
Pinterest’s current multiple is high, which could discourage shareholders and potentially sell them, lowering the stock price. But it’s worth noting that the stock is growing. I’m more interested in forward multiples, which seem reasonable when compared to the tech industry average.
| Metric | Industry average | |
|---|---|---|
| Price-to-sales ratio (P/S). | 6.1 | 1.7 |
| Price-to-sales ratio (FP/S). | 5.6 | 3.8 |
| Price-to-earnings ratio (FP/E). | 32.2 | 21.6 |
JPMorgan and Piper Sandler has a ‘buy’ rating on the stock with an average price target of $30. This is only a 13% increase from the current level. However, I believe that the stock can outperform the Oracle of Omaha portfolio over the long term.
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