The new year will be full of unknowns, especially with respect to a potential recession that could result from aggressive rate hikes. That said, one of the stocks with the potential to shine despite the economic headwinds is Amazon.
With the shift to online retail purchases, Amazon should be able to withstand an economic downturn, should that happen. The tech giant essentially reigns supreme in the online retail space and that should be expected to continue in 2023.
In a recent CNBC report, tech expert analyst Brian White of Monness Crespi Hardt confirmed Amazon’s prospects in the new year, citing “the growth runway ahead of Amazon in the areas of e-commerce, Amazon Web Services, digital media, advertising, Alexa, robotics, AI and others.”
COVID-19 is still a wildcard affecting the capital markets and according to White, the push for online retail should benefit "the company’s long-term business model.”
Traders looking to trade Amazon, but want a little bit of leverage to amp up gains can look at leveraged exchange-traded funds (ETFs) like the Direxion Daily AMZN Bull 1.5X Shares (AMZU ). AMZU seeks 150% exposure to Amazon stock, giving bullish traders that added leverage in order to extract more gains from their convictions.
Broad Play on Tech
Traders who don’t want to get stock-specific can look towards strength in the broader tech sector using the Direxion Daily Technology Bull 3X ETF (TECL ). The big tech sector has seen better years as evidenced by the NASDAQ-100’s loss of over 30% heading into the end of 2022.
That said, a big tech comeback could be brewing for 2023 should the U.S. economy avoid a recession and the Fed scale back on aggressive interest rate hikes.
With its triple leverage, TECL is certainly not for the weak of heart. The fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Technology Select Sector Index. The index includes domestic companies from the technology sector.
According to some market experts, these favorable conditions don’t have to necessarily play out in favor of big tech. In a Business Insider article, Dan Ives and John Katsingris of Wedbush Securities foresee strength in big tech despite an economic downturn thanks to a confluence of sector-specific triggers such as key mergers and beneficial cost-cutting — reasons to consider big tech as a value play.
“Tech valuations are trading below its five-year average, and there’s already a pretty low view of the sector, so now is the chance to own a high-quality stock,” Ives said.
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