Daily Stock Pick: February 14th, 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 seems to 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 less than 21x forward earnings. Still, with the most prominent family of apps and 4 billion users worldwide, META’s recovery this year has been swift  The ticker has stacked on 37% YTD. 

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, but 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 considering its price is still down more than 50% from its August 2021 ATH.

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 57 polled analysts, 39 recommend buying META stock while 14 rate the stock a hold and 4 say to sell. A median price target of $210 represents an increase of 18% from Wednesday’s closing price.