My top 5 stock holdings as we head into 2023

At this time of year, I always spend time reviewing my investment portfolio. I like to make sure it’s still aligned with my goals and risk tolerance. Today, I’m going to provide a sneak peak into my portfolio. Here’s a look at the five biggest stock holdings as we approach 2023.

Long term potential

Now, my biggest possession is Alphabet (NASDAQ: GOOG), owner of Google and YouTube.

Alphabet stock has not performed well in 2022. Like most other tech stocks, it has fallen as interest rates rise and investors move away from growth stocks. There may be weaknesses ahead.

I remain very confident about the long-term story here. Over the next year, I expect Alphabet to generate growth from digital advertising, cloud computing, digital health (it owns Fitbit), artificial intelligence (AI), and self-driving cars. Overall, I see the stock as a good fit for a long-term investor like myself.

Currently, Alphabet is trading at a price-to-earnings (P/E) ratio of less than 20. That price seems reasonable to me. So I’m comfortable being the top handle.

Growth and defense

The second largest holding in 2023 will be smartphone makers Apple.

I think it offers a nice mix of growth and defense. On the growth side, companies are moving into new markets such as electronic payments and digital health.

Meanwhile, on the defensive side, the company has a solid balance sheet and high brand loyalty.

I don’t expect big gains from Apple in 2023 because the valuation seems pretty complete right now. But in the long run, I expect the company to deliver solid results.

High growth industry

Coming in third place is Microsoft. Like Apple, I think Microsoft offers a good mix of growth and defense.

It is a company that operates in many high-growth industries, including cloud computing, video games, and AI. At the same time it has defensive attributes. Businesses will never stop using it office just because the economy is weak.

If tech stocks remain out of favor in 2023, Microsoft may underperform in the near term.

It’s a long-term hold for me, so I’m not worried about short-term performance.

Inflation hedge

My fourth biggest complaint is MasterCard. It operates one of the largest payment systems in the world.

I see Mastercard as a good hedge against inflation. It needs to be cut every transaction in the network. So when prices go up, so do profits.

It can also be a good hedge against recession. Today, consumers are strapped for cash and spend heavily on credit cards.

Mastercard is a fairly expensive stock. This increases the risk. I am comfortable with the valuation however, given the company’s market position and growth potential.

Dividend champion

Finally, the fifth largest holding is FTSE 100 legend Diageo. It is the owner of several premium spirit brands including Tanqueray, Baileysand Bullet.

I like having Diageo as my top shareholder because of its defensive nature, because of its stable results and dividend record (20+ years of consecutive growth). So it balances my portfolio, which is skewed towards growth stocks.

This is another stock that isn’t cheap. But I guarantee the premium price, given the competitive advantage.