There are many ways to value stocks. Investors look at financial results, historical performance, valuation, competitive dynamics and sources of competitive advantage when making decisions on which stocks to buy and sell.
While these are all important factors to consider, an easy factor to overlook is leadership. As a purely qualitative factor, it is not always easy to assess, but good leadership can make all the difference in the success of a company. CEOs set the tone for corporate culture and direction; make decisions on product, organizational structure and capital allocation; and perform other senior management roles.
Here are some of the top CEOs worth investing with in the new year.
1. Disney’s Bob Iger
waltz disney (SAY 0.51%) had an unforgettable year as the growth of its streaming platform slowed while losses mounted, and overall profits even shrank in the most last trimestre. At the same time, investor enthusiasm for streaming has faded, and Disney stock has fallen nearly 40% this year.
The entertainment giant surprised investors last month by bringing back CEO Bob Iger, who retired in early 2020 after executives grew frustrated with former CEO Bob Chapek, who restructured the company to give priority to the streaming division but left much of the creative talent feeling alienated. In the process.
Iger returns to the top job with an outstanding reputation in Hollywood and among Disney’s ranks, having led the company for 15 years prior, bringing Disney into the 21st century with acquisitions of Pixar, Marvel and Star Wars, Fox entertainment. assets, and finally the launch of Disney+.
The returning CEO has already returned to work, firing top Chapek lieutenants, promising another restructuring and prioritizing streaming profits over subscriber growth.
Turning the stock around won’t be automatic, but the good news is that the company already expects streaming losses to narrow from then on and called for balanced streaming profits by 2024 in its earnings call.
Disney has a ton of prized intellectual property and a flywheel business model designed to maximize its value. If Iger can help unlock that potential, the stock could skyrocket next year.
2. Airbnb’s Brian Chesky
Airbnb (ABNB 0.90%) has been a disruptor since its inception, starting with AirBed and Breakfast to help Chesky and his roommates pay rent by taking advantage of convention-goers in San Francisco who needed a place to stay.
In the 14 years since, Airbnb has disrupted the hospitality industry, offering more rooms than any hotel chain, with more than 6 million listings on the website.
Chesky has proven himself to be a worthy leader. When Airbnb was forced to lay off a quarter of its staff, Chesky created an employee talent manager to help separated employees find new jobs, and even assigned Airbnb’s own recruiters to help them.
More recently, Airbnb responded to a new set of user concerns, revamping the site to make it easier for users to see the real price they’ll pay after so many complaints about hidden information. cleaning fee. The company also just made a unique move to bring more online offerings, partnering with apartment owners to give renters the option to Airbnb their homes in at least 175 buildings.
2023 could be a pivotal year for Airbnb as the stock has crashed this year despite strong results; investors seem to think it could be hit hard by a recession. If Chesky can navigate through these economic headwinds and continue to innovate, the stock could be a big winner next year as it trades for a price/earnings ratio of just 40, an excellent valuation for a stock with Airbnb’s growth potential.
3. Gary Friedman of HR
HR (HR -0.36%) is in a unique position these days. The company was battered by a slump in the housing market; revenue and profit are down significantly in its third quarter earnings report. But he invests aggressively for the long term.
In the company’s letter to shareholders, Friedman said things will get worse before they get better for the company and said the headwinds of housing market weakness could linger for several quarters.
Despite these challenges, RH, the home furnishings company formerly known as Restoration Hardware, embarks on its most ambitious reinvention ever. The company expands the HR brand from furnishings to an expanded luxury brand that includes hotels, restaurants, luxury jet and yacht charters, an architecture and design-focused streaming service, and a corporate which will sell fully furnished homes designed by RH.
Friedman is a visionary in his field and has led RH to superior returns over the past decade, with the stock rising 700% since its IPO. Several years ago, he made the controversial decision to switch to a membership model that offers 20-25% discounts on all merchandise in exchange for a $175 fee. Although the stock initially fell on the move, it paid off – creating an embedded loyal following among its members. And that positions the company well for expanding its luxury brand into new categories.
While the next year could be tough for HR’s financial results, the company’s new businesses could start to gain traction. With the stocks trading at a P/E ratio of 9, it won’t take much to send the stocks soaring again.
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