Yes, the S&P/ASX 200 Index (ASX: XJO) has roared back, gaining 13.5% since the start of October.
But with steep interest rate rises still yet to fully bite into consumer spending and much of the developed world possibly heading into recession, it's no time to be profligate with stock choices.
Quality businesses are the name of the game as we head into an uncertain 2023.
Here are a couple of ideas:
'One of the highest quality companies on the ASX'
Spotee Connect founder Elio D'Amato is a fan of technology services provider TechnologyOne Ltd (ASX: TNE).
"Supported by its loyal and expanding client base, this cloud-based software solutions provider delivered an excellent full-year report," D'Amato told The Bull.
"It offers a strong balance sheet. TechnologyOne's objective is more than $500 million in recurring revenue by fiscal year 2026."
The share price, unlike most of its tech peers, is actually up 8.57% year to date. In fact, TechOne has impressively rallied more than 33% since the start of October.
According to Google Finance, the price-to-earnings ratio now sits at almost 52.
"While some may be quick to point to its lofty valuation, TechnologyOne remains one of the highest quality companies on the ASX, in our opinion."
D'Amato recommends TechOne shares as a buy, but other experts are a tad more uncertain.
Six out of the nine analysts that cover the stock, according to CMC Markets, are rating the stock as a hold.
'Double-digit earnings growth and increasing dividends'
In times of rising interest rates, it's often tricky to figure out where bank shares are headed.
In one camp, experts say rate increases benefit banks because they fatten up net interest margins.
The bears say higher interest rates deteriorate customers' ability to pay back loans, triggering a rise in defaults, which is adverse for business.
D'Amato is in the former camp, at least for National Australia Bank Ltd (ASX: NAB).
"The bank delivered a strong fiscal year 2022 result," he said.
"It generated revenue and cash earnings growth on the prior corresponding period, and the business banking division led the way."
The NAB share price is 6.6% higher than where it started the year, while delivering a 4.8% dividend yield.
D'Amato noted that the changing net interest margin is a boon for the major bank.
"The company widened its net interest margin in the 2022 second half when compared to the first half," he said.
"The second half net interest margin was above analyst expectations."
Next year will be even better for NAB investors, D'Amato feels.
"We remain optimistic that NAB can deliver double-digit earnings growth and increasing dividends in fiscal year 2023."
