New Trade for January 18th, 2023

Cyclical stocks suffered in 2022, but 2023 could be a banner year for growth stocks as inflation cools and the Fed eventually finishes the rate hiking cycle. Today we’re focusing on a deep-value growth name that could be poised for a comeback as cyclicals regain favor.  



One notable growth name that got hammered in 2022 is Meta Platforms Inc. (META). The stock currently trades at its cheapest level at less than 17x forward earnings, and it may have further to fall. Still, with the most prominent family of apps and 4 billion users worldwide, META’s recovery could be swift when tech turns around. 

Meta was once one of the world’s most valuable companies and is considered one of the Big Five American information technology companies, alongside Alphabet, Amazon, Apple, and Microsoft. As of 2022, it is the least profitable of the five and has fallen from the list of the top twenty biggest companies in the United States. The company owns Facebook, Instagram, and WhatsApp, among other products and services. In October 2021, the parent company of Facebook changed its name from Facebook, Inc., to Meta Platforms, Inc., to “reflect its focus on building the metaverse.”  

The metaverse is still in its embryonic stages. Still, an increasing number of market participants are jumping in on the companies they believe will lead the way into this fantastic new iteration of the internet. For investors who want to get their foot in the door now, pioneering META seems like a good choice, especially since its price has been slashed more than 66% over the past year.

Signs of a weakening ad market have been apparent as prices have risen across the board. Regulatory troubles, layoffs, and management changes have intensified the pain for META this year. But as inflation cools, Meta’s commercial ad spend seems likely to recover as soon as the second half of 2023.   If investors should be greedy when others are fearful, this may be the perfect time to scoop up shares of the social media giant.  

Of 58 polled analysts, 38 recommend buying META stock, while 19 rate the stock as a Hold, and only one rates it as a Sell. A median price target of $145 represents an increase of 6% from Wednesday’s opening price.