Could 2023 be a great year for stock market investment?

So far so good! Looking at the performance of my investment portfolio since this year started last month, I saw some interesting results. Since the beginning of January, the FTSE 100 up 5% – and has hit new all-time highs along the way. At NASDAQ the index in the US is 14% higher than at the beginning of the year.

However, as a long-term investor, my focus is not limited to a few weeks. However, I tried to build wealth through stock market investments over the years. While the FTSE 100 is 5% higher than a year ago, the NASDAQ is 14% lower.

With a strong start to the year so far, could 2023 be a good year to invest?

Focus on quality

I can.

But that’s not because I have any premonitions about the stock market as a whole. Nobody knows where the FTSE 100 will be next week, never mind the end of December.

But what I know now is that I can buy some big companies at attractive prices.

Take JD Sports precedent. The company has collapsed and expects to make a profit before tax and exceptional items of just over £1bn in the current financial year. But it has a market capitalization of £9bn. The price-to-earnings ratio (P/E) looks interesting to me.

I plan to keep JD Sports shares as I continue to see them as undervalued relative to their long-term prospects. This month the company announced ambitious growth plans, including opening hundreds of new stores each year.

Hunting for a bargain

But JD Sports aren’t the only ones I think can offer good prices these days.

A member of the FTSE 100 DCC has raised its dividend every year for almost thirty years. After the stock price fell, it traded at a P/E ratio of around 13.

But I see a strong growth opportunity for the conglomerate, which last week announced that its latest quarter saw higher profits than the previous three months. I think DCC looks cheap and recently added the stock to my portfolio.

Long term investment strategy

All companies face risk. JD Sports could see sales fall due to tighter consumer budgets, for example, while weak performance in DCC’s health business could hurt profits.

But if I can identify the group of shares I each offer great value given the business prospects, I can reduce the downside risk through diversification. In the meantime, I hope to have a long-term upside investment potential if business goes as well as I think it will.

Now I can see some stocks that fit that description. Some, like DCC, I have added to my portfolio. Others I am still looking for or looking for when I have spare funds to invest. Whatever happens in the stock market in 2023, I expect it to be a good year for investing.