How did your stock picking go this year?
It was a tough question to answer over family Christmas lunch this year. Unfortunately for my portfolio, I hold few ASX shares in the resource or utility areas of the market — the two best-performing sectors of the year.
As you can imagine, my 2022 returns have been abysmal, to put it lightly. The majority of my holdings are more tech-centric — which happens to be the worst-performing sector of the year. For context, the S&P/ASX 200 Info Tech Index (ASX: XIJ) is down 37% year to date.
However, it's important not to shift our goalposts. The ultimate success of investing is measured in five- or 10-year time periods. That's why I'm already planning to make the most of next year by buying high-quality ASX shares.
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Running attack next year
After a punishing stint for 'growth-oriented' investments, some investors might be tempted to shy away from fast-growing ASX-listed companies. However, I would argue that the next six to 12 months could be extremely opportunistic to add these more forward-looking businesses.
In my opinion, the enticing investments with high-growth potential are Jumbo Interactive Ltd (ASX: JIN), Pro Medicus Limited (ASX: PME), and Imdex Limited (ASX: IMD).
Another one to consider on my list is Objective Corporation Limited (ASX: OCL), with a track record of annual earnings growth in excess of 20%. However, I'd need to see the share price below $8.50 before I felt confident adding this one to the portfolio.
My best defensive ASX shares for 2023
Many are worried about an impending recession next year as interest rates climb to their peak.
I believe the addition of some sturdy companies less susceptible to feeling an economic pinch can help reduce the overall volatility of the portfolio. In other words, these ASX shares are my favourites for 2023 to help me sleep better at night.
The most defensive two, in my opinion, are Sonic Healthcare Limited (ASX: SHL) and AUB Group Ltd (ASX: AUB). Despite any potential economic headwinds, I'd say there's a good chance people will continue to get blood tests and insure their valuables.
In addition to these, I think Lynas Rare Earths Ltd (ASX: LYC) and Codan Limited (ASX: CDA) are more antifragile than some might assume. Rare earths are commonplace in modern technology and are critical in the energy transition — any destabilisation of relationships with China could further exacerbate the problem. Meanwhile, Codan's communications division provides mission-critical products to both frontline workers and the military — areas of the economy that don't stop during a recession.
Income support
Lastly, in the event of a recession, we could all appreciate some extra money flowing in. That's why my final two best ASX shares to buy for 2023 are dividend payers.
Currently yielding 7.6% and 8.8%, JB Hi-Fi Limited (ASX: JBH) and Shaver Shop Group Ltd (ASX: SSG) are two well-capitalised and well-run retailers.
While retail tends to be hit hardest by weak economic environments, I trust these two companies have the balance sheets and the management to navigate the storm. Furthermore, both appear priced as though a tumultuous future is already factored in, trading on price-to-earnings (P/E) ratios of 9 times earnings.
