With the year coming to a close, it seems like an ideal time to refresh your portfolio for 2023. So, here are our analysts’ top investment ideas and how you can mirror them to help you in the year ahead.

Idea #1: Clean and dirty energy

Russell Burns is looking at capacity constraints, rising demand from China, and the US refilling its strategic reserves and seeing a positive outlook for the oil and gas industry in 2023. Alongside all that, he’s watching the transition to cleaner energy sources and its potential to become a megatrend, boosting demand for metals like nickel, lithium, copper, and iron ore for years to come.

How can you take advantage?

The Energy Select Sector SPDR Fund ETF (ticker: XLE; expense ratio: 0.1%) is a cheap

way to buy into large US energy stocks. On the commodities side, BHP Group and Rio Tinto

mine lots of the key metals needed in the transition to clean energy and could benefit from rising demand leading to rising metal prices.

What could go wrong? An unexpected peaceful resolution to the Russia-Ukraine war would likely send oil prices down and reduce the urgency in the global shift to alternative energy sources.

Idea #2: Copper

Luke Suddards has got three more reasons to be positive about copper, beyond its role in cleaner energy. First, he’s expecting the US dollar to fall in value versus other currencies, and because the metal’s price tends to move inversely to the greenback, that could send it higher. Second, he’s optimistic the Chinese economy – which consumes 52% of the world’s copper – will recover and spark new demand. Third, there’s a shortage of copper out there, and it takes at least seven years for new mines to come online, meaning demand’s likely to outstrip supply and send copper’s price up.

How can you take advantage?

There are a couple of investments that might fit the bill: the iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC; 0.45%) buys copper futures, and the Global X Copper Miners ETF (COPX; 0.65%) buys shares in companies that mostly mine the metal.

What could go wrong? Doctor Copper’s so nicknamed because its price is sensitive to the health of the global economy, which is looking ominous.

Idea #3: US homebuilding

Paul Allison’s top idea is focused on the leading supplier and distributor of residential and commercial insulation in the US. He’s identified a company operating in an attractive market structure: competition is fragmented, but dominated by the top two players, with a combined 70% market share. Its customers are fragmented too: there are about 50,000 US homebuilders. And insulation’s a small but crucial cost in a new home, meaning buyers are unlikely to try to scrimp and save when sign-off from building regulators is on the line.

How can you take advantage?

TopBuild (BLD) is a potentially attractive company in this space. Not only does it operate in a favorable market structure, but its underlying supply and demand dynamics are also supportive in the long term, and its current valuation screens as attractive. See, despite recent concerns about house prices and mortgage rates, there are still too few homes available out there – and TopBuild’s exposed to new construction, not existing home sales. Looking at valuation, its 10x price-to-earnings ratio is half that of the S&P 500 and its free cash flow yield of almost 7% compares to the average of 0.5% – all while it’s growing sales faster than and having profit margins higher than the US stock market’s average.

What could go wrong? Insulation installation is a dirty and dangerous business, which makes attracting and retaining staff a challenge that could result in higher costs and lower profits. Of course, the housing market is a big risk too: higher interest rates will suppress transactions and have a negative impact on demand.

Idea #4: Chinese stocks

China’s economy and stock market have been hit by the country’s zero-Covid policies. But according to Daniel Johnston, easing restrictions even as cases continue to rise suggests a partial backtrack is potentially in the cards. In fact, Goldman Sachs predicts that China could end its zero-Covid policies altogether in 2023. That plus the government providing fresh waves of economic support could make owning Chinese stocks a pretty attractive option, given valuations that are still languishing.

How can you take advantage?

One way to try to benefit from a recovering Chinese economy is to go for indexes such as the SPDR S&P China ETF (GXC; 0.59%) or iShares MSCI China A ETF (CNYA; 0.6%), which hold a wide range of companies. After all, every corner of the economy will benefit from a full Chinese bounce back.

What could go wrong? The key risk here is that the government sticks to its zero-Covid stance for longer than expected, pushing any recovery further away.

Idea #5: Blue-chip cryptocurrencies

Jonathan Hobbs sees interest rates as likely to come down in 2023. And with crypto valuations much lower than they were a year ago and a lot less leverage in the market, he’s excited for the year ahead in cryptocurrencies.

Some people have declared crypto dead, but on-chain data shows that long-term holders are accumulating coins, and blockchain network effects are growing. Jon’s seen this movie before and expects it’ll play out with a big rally.

How can you take advantage?

A 50/50 split between bitcoin (BTC) and ether (ETH) is a sensible way to seize the opportunity: they’re more established than the other coins and have the biggest networks and market sizes. Ether might see more upside than bitcoin, but it could also be more volatile, so rebalancing back to your original 50/50 split once a quarter could help offset some of that volatility.

What could go wrong? One of the biggest risks to watch here is regulation. If governments deliberately make it very difficult for investors to buy and hold crypto, that could dampen investor appetite and market prices.

Idea #6: Industrial gas companies

A likely recession, continued inflation, and interest rate hikes all over the world point toward higher volatility for the year ahead. So Theodora Lee Joseph’s idea is to invest in the industrial gas industry. It offers a “barbell” approach of being mostly defensive, yet having some exposure to a potential recovery that benefits cyclical, or growth-linked, firms.

Companies that provide gases to large manufacturing industries typically have long-term “take-or-pay” contracts whose prices rise with inflation, and that gives investors a high degree of certainty about future earnings, even in a recession. They also operate in a highly concentrated industry, where about 70% of the market is covered by the top three producers. That means that, in a downturn, product prices are unlikely to drop.

How can you take advantage?

There are a handful of companies leading the space, including Air Liquide, Linde, and Air Products & Chemicals (APD) – and it’s the latter that Theodora’s most interested in. Air Products has new projects starting in the next two years which’ll help drive growth. And the company could benefit from the green energy revolution given it’s the world leader in hydrogen production.

What could go wrong? The risks here are focused on the company itself: execution fails within projects and customers not being able to pay agreed fees could send things the wrong way.

Idea #7: Gold

Stéphane Renevier’s idea plays on three big factors that drive the price of gold: interest rates (falling is good), inflation (high is good), and the US dollar (weaker is good). He says all three factors are likely to move in gold’s favor next year. As the US economy slows, interest rates and the value of the dollar should fall. And at the same time, inflation will likely stay higher than investors expect.

How can you take advantage?

Unless you've got space for it under the mattress, the Goldman Sachs Physical Gold ETF (AAAU; 0.18%) could do the job.

What could go wrong? If the US economy slows just enough to bring inflation down, but not so much as to push it into a recession, gold’s unlikely to prove the best investment.

Idea #8: Trading down beneficiaries

Lastly, here’s my idea. I’ve been looking for ways to play the UK recession. Between food and energy prices, inflation has left typical consumers with much less money to spend after their essentials are paid for. In previous economic downturns, we’ve seen consumers “trade down”: essentially trying to maintain similar shopping habits but swapping in cheaper options for more expensive ones.

How can you take advantage?

Most discretionary industries, in which companies sell things people want but don’t necessarily need, will see the impact of consumers trading down. For example, people might swap a pricey Deliveroo delivery for a cheaper order via Just Eat Takeaway.com or Domino’s Pizza. In clothing, consumers may shy away from the high-street fashions of H&M and Zara and Bershka owner Inditex in favor of Primark-owner Associated British Foods, for one example. Even in grocery, which isn’t discretionary, cut-price retailers like B&M European Value and keen-priced grocers like Tesco could benefit from consumers switching to their store-brand products instead of more expensive labels.

What could go wrong? A shorter and shallower recession could limit the uplift to earnings these trading-down beneficiaries may receive. At the same time, a deeper and longer downturn could drive a larger change to consumer shopping habits, meaning they pare their discretionary spending altogether.