The stock market has endured a dreadful year, with most equities seeing their valuations fall dramatically throughout the year. With valuations so heavily compressed, investors are rightfully looking to find the best possible stocks to invest in for 2023.
As interest rates rose, we saw the valuations of companies that remained unprofitable and dependent on future cash flows compress most violently as stocks like Fiverr and Upwork fell 80-90% from their 2021 highs. As we move into 2023, it may be reasonable to conclude that companies achieving GAAP profitability with the highest YoY revenue growth rates are the most likely contenders to recover rapidly from their poor performance in 2022. SiTime Corp ( YoY Rev Growth of 78%), Monolithic Power Systems Inc (YoY Rev Growth of 53%), and Enphase (YoY Rev Growth of 81%) are examples of stocks that fit these criteria.
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