In 2022, the U.S. stock market had its worst performance since 2008. With the Federal Reserve reaching the end of its rate hikes in 2023, it is likely to cut interest rates in the second half of 2023. This shift in monetary policy will bring about the beginning of increased capital. Meanwhile, after a year of downward adjustments in the stock market, the P/E value will enter a relatively safe area. Therefore, I recommend people to invest in the U.S. stock market.

One of the most promising investment is to invest in Science Technology Innovative (STI). First, these are rising industries, and the industry landscape is economically pro-cyclical. Second, the barriers to entry are high because of constant technological innovation and patent protection which eliminates competitors for existing companies. The government also encourages and supports the innovation and development of technology companies. Further, the decline in technology stocks in 2022 has resulted in a reasonable share price of the stock in 2023, which the capital market will favour. The stock price will rise quickly as a lot of people will buy at this price. This allows people to gain a large amount of money within a short term without facing a lot of risks. Within those fields we need to choose companies with new areas of growth and in the R&D and marketing stage. This way, the profit margin will be large.

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We also want companies with high user volume and loyalty. To lower the risk of large fluctuations while bringing in profits, my investments will be based on large companies. This narrows the field down to four companies: Apple, Google, Microsoft, and Tesla.

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We look at the following criteria while assessing the risks

1. Market capital: large capital and Mega capital (more than 17 billions) which is more steady than small and medium capital company

2. Price/earning (P/E) less than 26

3. Price/earning to growth (5 years expected) not greater than 2.2

4. Operating Margin TTM greater than 25%

5. Profit margin greater than 20%

6. Debt/Equity (D/E)% less than 55%

7. Return on Equity (ROE)% greater than 25%

8. Free cash flow is steady or increased within these 2 years.

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Specifically, Google’s latest financial report for September 2022 shows P/E TTM 17.92, Operating Margin TTM 27.85%, profit margin 23.75%, D/E 29.2%, ROE 26.89%, levered cash flow TTM 48.26 billion. Microsoft’s latest financial report for September 2022, shows P/E 26.75, PEG 2.1, operating margin TTM 41.69%, profit margin 34.37%, D/E 51.7%, ROE 42.88%, and levered cash flow TTM 46.16 billion. This data suggests both companies have steady growth and a reliable cash flow reserve. So I would recommend these companies to my clients.