This is the worst year for the U. S. stock market since 2008, but it's a good year for value investments, as well as for Barron's favorite stocks.

For the past 13 years, Barron Weekly has selected 10 stocks that are expected to outperform the market every December. Value stocks outperformed growth stocks by 19 percentage points this year, and the 10 value-inclined stocks selected by Barron Weekly in December performed well.

Since Barron Weekly announced the 10 stocks selected this year in December 2021, as of December 14, 2022, their total return was-1.7%, 10 percentage points higher than the S & P 500 (the index includes dividends with a return of-12.1% over the same period). At the end of the year, 6 of the 10 stocks rose, with the biggest increase being$Shell PLC (SHEL.US)$And those who bucked the trend in the sell-off of technology stocks.$IBM Corp (IBM.US)$。

The 10 stocks of Barron Weekly easily outperformed the market in 2022.

Barron Weekly's 10 stocks for 2023 include some well-known companies and companies that are expected to surprise investors:$Alcoa (AA.US)$、$Alphabet-A (GOOGL.US)$、$Amazon (AMZN.US)$、$Bank of America (BAC.US)$、$Berkshire Hathaway-A (BRK.A.US)$/$Berkshire Hathaway-B (BRK.B.US)$、$Comcast (CMCSA.US)$、$Delta Air Lines (DAL.US)$、$Medtronic (MDT.US)$、$Madison Square Garden Sports (MSGS.US)$和$Toll Brothers (TOL.US)$. Amazon.Com Inc and Berkshire are the two companies re-selected this year.

Here are the reasons why Barron Weekly is bullish on these stocks (in alphabetical order):

In the new year, good companies with cheap stock prices are expected to be winners.

Alcoa (AA)

Alcoa's aluminum does not attract as much attention as copper, but it is equally important for a low-carbon world because it is used in renewable energy, lightweight and recyclable.Alcoa may be the best and greenest aluminum producer in the world, with about 80 per cent of its smelting business coming from renewable energy, mainly hydropower.

However, Alcoa's share price has fallen 24% this year to $45 recently, less than half its 2022 high of $98, as aluminum prices are down 35% from their spring peak in 2022. Alcoa, which trades at 9 times 2022 earnings, is expected to bottom out in 2023, compared with 14 times earnings.In addition, Alcoa's balance sheet is healthy, but it has been ignored by investors.

China accounts for about half of global aluminum supply and demand, and if China's economy grows further in 2023, it will also be a boon for Alcoa.

Steve Galbraith, chief investment officer of Kindred Capital Advisors, said:Alcoa is the most environmentally friendly integrated aluminum producer and will benefit from growing long-term demand. "

Alphabet (GOOG, GOOGL)

The share price of Alphabet Inc-CL C's parent company, Alphabet, fell 34% in 2022, due to slowing revenue growth and investors' concerns about weakness in the search advertising business. The company recently traded at $95, 18 times its expected 2023 earnings, a price-to-earnings ratio that is low for a large company. Another reason for the decline in the price-to-earnings ratio is losses in businesses classified as "Other Bets", including Waymo, the self-driving car business.

What can make Alphabet rise again?Joe Rosenberg, a former chief investment strategist at Loews, thinks Alphabet has become too bloated and agrees with British investor Chris Hohn, who wrote to Sandal Sundar Pichai, chief executive of Alphabet, that "Alphabet's cost base is so high that management needs to act aggressively." "

Indeed, Alphabet's workforce has grown by 20% this year, almost doubling since 2018. Alphabet, which recently integrated its Maps and Waze business teams, seems to have heard the call, with the possibility of massive layoffs in the future.

Alphabet should also pay a dividend, which should be done for a mature and profitable company that has been listed for 18 years.The possibility of paying dividends is another reason to buy the stock.

Amazon.Com Inc (AMZN)

The slowdown in Amazon.Com Inc's cloud computing and retail business this year sent its shares down 45% to $91. Amazon.Com Inc has invested more than $80 billion in logistics and transportation in the past three years and should do better in the coming year as the company cuts costs and improves the efficiency of its online retail business.

Michael Morton, an analyst at SVB MoffettNathanson, estimates that excluding the lucrative advertising business, Amazon.Com Inc's retail business has a negative operating margin. Morton recently began to track and analyze Amazon.Com Inc, giving a "outperform" rating and a target price of $118,000,000. While Amazon.Com Inc's goal is to "please" consumers, he also needs to make money in the retail business, and the company is moving in that direction.

Morton wrote in the research newspaper:"over the past three years, Amazon.Com Inc's price-to-earnings ratio has declined, pre-tax profit expectations have dropped, and capital intensity has been higher than expected. We think these problems are about to be solved. "

Based on expected 2023 earnings, Amazon.Com Inc's price-to-earnings ratio is 50 times, the stock is not cheap, but few companies have two dominant businesses, in addition to the retail business, Amazon cloud business Amazon Web Services profit prospects are also very good, with huge growth potential. Although Amazon.Com Inc's stock may not rise as much as 270% in 2009, it is expected to have a better year than this year.

Bank of America Corporation (BAC)

In recent years, Bank of America Corporation's slogan has been "responsible growth", which is evident in the highest quality loan portfolios of large banks. However, Wall Street's attitude towards Bank of America Corporation is not much different from that of other banks, with Bank of America Corporation down 25% to $33 this year as investors worry about the impact of a potential recession on the banking sector.

However, based on expected earnings of $3.69 per share in 2023, Bank of America Corporation trades on a price-to-earnings ratio of less than nine times earnings, with a dividend yield of 2.8 per cent. Bank of America Corporation's "conservatism" is also reflected in dividends, with a dividend yield lower than that of some of its main competitors.The bank lends mainly to wealthy customers who are able to withstand an economic slowdown. In addition, the rise in short-term interest rates has also boosted Bank of America Corporation's profit margins.

Mike Mayo, an analyst at Wells Fargo Securities, said: "in my 30 years of tracking and analyzing the banking industry, I have rarely seen a situation like Bank of America Corporation, where fundamentals have improved but stocks have performed so badly. He listed Bank of America Corporation as the preferred stock, with a target price of $52. Mayo said: "Bank of America Corporation is better than any other big bank in reducing balance sheet risk.And better able to cope with recession than at any time in the past half century. "

BRK.A, BRK.B)

Buffett's Berkshire is still one of the most reliable defensive super-large-cap stocks, worthy of investors to consider including their own portfolio. Berkshire class A shares are up 4% this year, compared with a total return of-15% for the s & p 500. Berkshire has overtaken Tesla, Inc. (TSLA) and Meta Platforms (META) to rank fifth with a market capitalization of $680 billion.

Berkshire's prospects are good in 2023. Buffett has been active in buying stocks this year, including OXY for $10 billion and Chevron Corp for about $20 billion. Buffett also bought Alleghany, a property and accident insurance company, for $12 billion on attractive terms.

These investments will boost Berkshire's returns, as will Berkshire's $100 billion in cash as short-term interest rates rise to 4%. Berkshire earns more than $30 billion a year, thanks to its wide range of businesses, including railways, insurance and energy. The share price level is reasonable, about 1.4 times the expected book value at the end of 2022, in line with the five-year average.

One risk is how long the 92-year-old Buffett will remain as CEO. Buffett is irreplaceable, but shareholders may benefit if Berkshire decides to pay a dividend or spin-off later.

Comcast Corp (CMCSA)

The share price of telecom giant Comcast Corp has been hit by the slowdown in its broadband service, or high-speed Internet access, this year, while more and more cable TV customers are choosing to stop subscribing to its service. Comcast Corp is down 30% to $35 this year.

However, Comcast Corp's business may be doing better than outsiders think. The company's broadband business has 32 million users and is highly sticky, and the company also has pricing power. Comcast Corp also owns NBCUniversal and Sky, an European satellite television company. SVBMoffettNathanson analyst Craig Moffet (Craig Moffett) pointed out that Comcast Corp's 2023 forward price-to-earnings ratio of 10 times, investors basically own NBCUniversal and Sky for free.

Wall Street has little interest in NBCUniversal's Peacock streaming business, which loses more than $2 billion a year, and many investors want Comcast Corp to spin off or sell NBCUniversal and Sky. Brian Brian Roberts, the company's chief executive, whose family owns Comcast Corp, has always disapproved of a split, although at current share prices it may not be necessary.

Moffet explained:Investors don't like Comcast Corp's diversified business portfolio very much, so there is a problem of diversified discount (conglomerate discount) in the company's shares. "Moffet rated Comcast Corp as "outperforming the market" with a target price of $46. "even with this big discount, the stock is still very cheap," he said. "

Delta Airlines (DAL)

Delta is the most highly managed airline in the United States and its profits are expected to increase significantly over the next two years. Delta, which looks inexpensive at about $34, is expected to earn $5.50 a share in 2023, on a price-to-earnings ratio of six times, based on its recent median forecast. The price-to-earnings ratio is 5 times expected earnings per share of $7 in 2024.

Investors are cautious about airlines because stocks in the industry have historically performed poorly.Last week, however, Delta predicted that revenue would grow by 15% to 20% in 2023 and profits would nearly double.Helane Becker, an analyst at Cowen, believes Delta has the ability to achieve these goals, giving the stock a target price of $54. "We think the goals set by management are conservative and achievable unless there is a severe recession," Baker said. "

In fact, Delta is using its free cash flow to repay debt during the outbreak and has not resumed dividend payouts like rivals such as LUV.Delta is an industry leader in cabin segmentation, with a strong hub network and a leading position in many of the busiest airports in the United States. Delta shares may finally be ready to take off.

Madison Square Garden Sports (MSGS)

Sports teams are paying record prices at a time when billionaires are scrambling to buy assets, but Madison Square Garden Sports, which has two valuable teams, is not. Madison Square Garden Sports is one of only two listed companies in the major professional sports field.

Madison Square Garden Sports recently traded at $160, valuing it at $3.9 billion, 50 per cent below the combined value of the two teams estimated by Forbes. Forbes estimates NBA's New York Knicks (New York Knicks) at $6.1 billion and the NHL New York Rangers (New York Rangers) at $2.2 billion.

This is because the full value of the team is usually realized only when it is sold, and the Dolan family, which controls it, is not interested in the sale. But Jon Boyar, president of Boyar Research, believes Madison Square Garden Sports is becoming more shareholder-friendly, recently returning $250 million to shareholders. After the 2024-2025 season, the new NBA television contract will bring a big boon, possibly at least twice as much as the current contract. Boyar believes that Madison Square Garden sports should be worth twice as much as it is today.

Medtronic PLC (MDT)

Medtronic PLC is one of the "dividend aristocrats".Has increased dividends for 45 years in a row.But the stock of the top medical device maker is not doing very well. The share price, which has recently been about $78, is down 24% this year and has been falling for the past five years.

Medtronic PLC's forward price-to-earnings ratio of about 14 times that of competitors Boston Scientific (BSX) and Stryker (SYK) is very attractive. The company raised its dividend by 8% in may, giving a dividend yield of 3.5%.

Medtronic PLC cut his earnings per share forecast by about 30 cents in November, citing an unexpected slowdown in sales and currency headwinds, which are now expected to range from $5.25 to $5.30 a share in the fiscal year to April. The company also suffered a setback in the development of a kidney device designed to lower blood pressure.

However, Geoff Martha, Medtronic PLC's chief executive, said in the earnings announcement that the company was "taking decisive action to improve performance" and that the first step was to reduce costs, a move that may cause some pain, but the benefits are clear. "although Medtronic PLC has lost his appeal in the eyes of some people, he has not lost his growth, which is one of the reasons why we hold this stock," said David King, chief fund manager of Columbia Flexible Capital Income. "

Toll Brothers (TOL)

Shares of homebuilder Toll Brothers are down 30% this year, but while rising mortgage rates are bearish, Toll Brothers, the top luxury builder for wealthy buyers, sells for an average of about $1 million, less affected than other homebuilders. About 20 per cent of people who buy Toll Brothers properties pay cash, and many sell their homes for much more than the purchase price.

Although new orders fell by more than 50% in the most recent quarter, the backlog is still large. Evercore ISI analyst Stephen King (Stephen Kim) rated the stock as "outperforming the market" with a target price of $63.

Toll Brothers shares are trading at about $50, below their book value of $55 and trading at just seven times forward earnings.If Fed policy shifts in the future, housing construction stocks, which are closely related to interest rate movements, will become attractive buyers.One uncertainty is that after co-founder Bob Toll dies in October, the company could become another homebuilder or an acquisition target for Berkshire.