The S&P 500 has fallen roughly 7% since the end of November as the promising fourth quarter rally faded. Stocks were down again through early afternoon trading on Wednesday as Wall Street attempts to gauge what’s to come in 2023 in terms of interest rates, inflation, corporate earnings, and much more.

The stock market has been rough in 2022 outside of energy and a few other pockets of the economy. Lingering inflation, higher interest rates, and a natural slowdown in the economic cycle, coupled with energy market disruptions and supply chain setbacks have many economists and market participants fearful that the U.S. is headed for a recession in 2023.

Jay Powell and the Fed have continued to stress that they have a lot more work to do before they get inflation under control. And the 2-year Treasury yield has climbed over the past two weeks from around 4.18% to 4.36% on the back of signs of ongoing economic resilience.

Despite the run, the 2-year yield is still well under its highs from early November of 4.70%. This dynamic appears to signal that Wall Street thinks the Fed will be able to ease off the gas and slowly lower rates sooner than Powell and Co. have signaled.

China’s rapid about-face on its zero-covid policy appears to be creating near-term chaos. But the temporary setbacks could prove worth it if the world’s second-largest economy is able to return closer to normal as the U.S. and many others have.

Still, the hope of a mini Santa Claus rally seems to have disappeared. The benchmark remains under its 50-day moving average again and it’s not yet approaching oversold levels.

The S&P 500’s next support level might come in the form of the 200-week average that’s provided support and helped spark the initial fourth quarter rally off the late September and early October lows.

The selling and choppiness could remain in place until the fourth quarter earnings season gets underway in a few weeks. The fear at the moment is that 2023 corporate earnings could turn out to be worse than currently projected, which would require further recalibration to the downside. If executive guidance ends up coming in stronger than expected, stocks could rally.

Image Source: Zacks Investment Research

Much uncertainty clearly remains. But investors have historically been well served by staying exposed to the market. In fact, JPMorgan in September noted that the S&P 500 annualized a return of 9.7% over the last 20 years. Yet, “missing just 10 of the market’s best days, which tend to occur within less than one month of the 10 worst days, would have reduced that annualized return to 5.5%.”

With this in mind, investors likely want to buy stocks for 2023. Yet, jumping back into growth stocks and beaten-down tech names might not be the most prudent investment play just yet. Instead, investors might want to stick with what’s been working during the largely brutal 2022.

Let’s explore a Zacks screen that helps investors find ‘Strong Buy’ stocks trading near their highs as we head into 2023…

Don't Be Afraid of New Highs

Some investors might prefer not to buy stocks at new highs. But if somebody asked you what the best stocks in your portfolio are, it’s likely you would name the stocks moving up the most.

The most basic idea is that the winners in your portfolio are the ones going up. If a stock is underperforming the market or going down, you'll quickly identify it as one of your worst holdings. Therefore, it makes sense that some of these stocks will be reaching new highs along the way.

Many investors are hesitant to buy stocks making new 52-week highs. But there really isn’t any reason to be. Some may worry that they have already missed the mark at that point, or that now it has more room to fall. Still, a stock making a new 52-week high is a ‘good thing,’ just as one falling to a new 52-week low is a ‘bad thing.’

On top of that, would the person who doesn’t want to buy stocks making new highs be upset if a stock they owned broke out to a new 52-week high? Statistics have also shown that stocks making new highs have a tendency of making even higher highs. And aren’t these the stocks we all dream about?

Now obviously, the fundamentals need to be there, and you should try to keep an eye on valuations. But if you were in a stock making new highs and cheering it on, it seems odd to be afraid of one doing the same just because you haven't bought it yet.

Think about this: A stock just made a new-52 week high, which is great news. Guess what? Last year it made a new 52-week high as well. And the year before that. And the year before that. Can you imagine all the money you'd be leaving on the table if you were afraid of being in stocks every time they made a new high?

Parameters

• Current Price/52-Week High greater than or equal to .80

• Percent Change in Price over 12 Weeks greater than 0

• Percent Change in Price over 4 Weeks greater than 0

• Zacks Rank equal to 1

• Price/Sales Ratio less than or equal to Industry Median

• P/E (using F1 Estimates) less than or equal to Industry Median

• Projected One Year EPS Growth F(1)/F(0) greater than or equal to Industry Median

• Current Avg. 20-Day Volume greater than Previous Week's Avg. 20-Day Volume

• All of the above parameters are applied to stocks with a Price greater than or equal to $5 and an Average 20-Day Volume of greater than or equal to 100,000 shares.

• Percent Change in Price over 12 Weeks + Percent Change in Price over 4 Weeks equal to Top # 5

Here are two of the five stocks that made it through today’s screen…

Global Partners (GLP Quick QuoteGLP - Free Report)

Global Partners is one of the largest independent owners, suppliers, and operators of gas stations and convenience stores in the Northeast, boasting roughly 1,700 locations. GLP also owns, controls, or has access to one of the largest terminal networks in New England and New York. Global Partners then distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers, and commercial customers. The firm also transports petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada.

Global Partners is part of Oil and Gas - Refining and Marketing-Master Limited Partnerships space that crushed the market in 2022, up 15%. GLP shares have surged 85% in the last two years, including a 50% run higher in 2022. This impressive showing features a 40% climb in the last three months alone to see it trade at around $35 per share. Plus, its 7% dividend yield blows away the likes of Exxon Mobil XOM and other oil and energy giants.

Global Partners has crushed our bottom-line estimates in the trailing four quarters by an average of 290%, including a 135% beat in early November. Analysts raced to update their EPS outlooks for FY22 and FY23 as the oil and gas industry continues to boom.

MRC Global (MRC Quick QuoteMRC - Free Report)

MRC Global is a top distributor of pipe, valves, fittings (PVF), and other infrastructure products and services. MRC sells its offerings around the world to various diversified end-markets including gas utilities, downstream, industrial and energy transition, upstream production, and midstream pipeline sectors. MRC Global boasts that its “unmatched quality assurance program offers over 250,000 SKUs from over 10,000 suppliers, simplifying the supply chain for approximately 10,000 customers.”

MRC Global is part of the Zacks Steel - Pipe and Tube industry that currently ranks in the top 4% of over 250 Zacks industries. The firm topped our EPS estimate by 35% last quarter and provided upbeat guidance that sent its consensus earnings estimates surging.

Zacks estimates call for MRC Global’s earnings and revenue to climb in both 2022 and 2023. MRC Global shares have soared 60% in 2022 vs. its industry’s 45%. MRC shares have climbed 55% in the last three months alone to trade around $12 a share.

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.