2 FTSE 100 stocks with eye-catching potential for 2023

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet

We might still only be in Q3 2022, but I’m already starting to think about FTSE 100 stocks that I can buy now for 2023 gains. Although I dedicate some of my money to defensive stocks due to the uncertainty going forward, I also want to target some growth ideas. After all, if I can achieve a high return on even one company, it can help to lift the value of my portfolio overall. Here are some examples I’m thinking of buying.

A pandemic FTSE 100 stock

First up is Kingfisher (LSE:KGF). The owner of Screwfix and B&Q has underperformed in 2022. The share price is down 34% over the past year, with cost inflation and supply chain problems being flagged up. Continued pressure in this regard is the main risk I see.

I think that now is a good time for me to buy the stock ahead of what 2023 could bring. My vision for next year is a situation where inflation will finally start to fall due to high interest rates. So although cost inflation should decrease, consumer spending should be tighter due to low economic growth.

Lower inflation should allow the business to be more competitive on profit margins. Money-conscious customers could also help the firm. I think we’ll see a return to a situation like the pandemic where people will return to DIY projects rather than paying for professionals to do work on their homes. This time it’s not due to being stuck at home, but rather because it’s cheaper to do things themselves rather than paying others to do it.

The current forecast pre-tax profit for the full-year is £770m, versus £949m from the previous year. I’d expect upward revisions to future trading updates, especially as we go deeper into 2023. If the share price returns to its pandemic highs, it would be almost a 60% upside from current levels.

A pivot that could pay off big

The second company I’m thinking about investing in is Hargreaves Lansdown (LSE:HL). The stock has been battered over the past year, with sharp falls relating to misses in earnings. Down 39% in a year, it’s one of the worst performing FTSE 100 stocks.

One reason I like the stock is that I feel the bad news is priced in. The 26% fall in profit before tax for the full year was widely expected. I feel that we’d have to get some fresh negative catalysts (which may still happen) to push the share price down even further. This reduces my downside risk.

The main reason I’m thinking of buying is due to the potential for wealth management next year. In the annual report, it spoke of how the addressable wealth and cash market in the UK is worth £3trn. The revenue potential here is huge.

The business also has a strong existing base of clients to pitch this to, with “engaging tools, data analytics and timely relevant nudges” all ready to be deployed. Considering that the highs of the past year represent a 100% return from current levels, the potential is large if the strategy pays off.

A concern is that this new part of the business doesn’t take off, with declining client balances and net outflows. This could hamper any share price gain for next year.

The post 2 FTSE 100 stocks with eye-catching potential for 2023 appeared first on The Motley Fool UK.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.