What Is the Next Big Thing to Invest in
As experts considered the best stocks to purchase for 2022, they surely were looking over their shoulders. Unforeseeable events have recently made a mockery of strategists' carefully considered forecasts. COVID in 2020 and supply-chain chaos in 2021 are but ii of the latest reminders of that fact of investing life.
On the one hand, the consensus view entering 2022 was for the global economic recovery to accelerate through this year. That naturally prompted enough of strategists to pluck their top stock picks from cyclical sectors and recovery-sensitive industries.
On the other hand, economical forecasts are hardly gospel. What if the recovery is neither every bit brisk nor every bit widespread as it was in 2021? Even slight changes in market expectations tin cause big swings in asset prices.
And so when it came to picking the all-time stocks to buy for 2022, the experts were bullish ... just as well realistic. Subsequently all, stocks – fifty-fifty the best of them – never get up in a straight line.
"While the world maintains its focus on the battle against COVID-19, there are reasons for optimism in the months ahead," Land Street Global Advisors said in their 2022 outlook. "Nosotros believe that the current economic recovery volition continue to deliver above-potential global growth; markets are indeed 'standing the climb.' Only equally we movement past peak momentum and peak adaptation, the recovery that follows volition likely be uneven and multi-layered."
Nothing did more to underscore the potential for an "uneven and multi-layered" recovery than the emergence of the COVID omicron variant. The market shuddered at the thought of how fragile our current state of progress might be. As a result, some experts' all-time stocks for 2022 include more defensive and durable names.
Given that the past 2 years take shown that anything tin happen, we at Kiplinger believe the nigh prudent approach is to programme for a range of outcomes.
Hither, and so, are the 22 best stocks to buy for 2022. Several of these top stocks are fix to outperform among a continued or accelerating economic recovery both at home and away. Others are more defensively positioned – built to grow should we relish smoother waters in 2022, only also able to withstand additional COVID-related disruptions. Other picks are contrarian plays; that is, names that were pummeled in 2021 merely could run across a big render to favor in the new twelvemonth.
Data is as of Feb. 3. Stocks listed in opposite order of yield. Dividend yields are calculated by annualizing the most contempo payout and dividing past the share price.
- Industry: Entertainment
- Marketplace value: $254.9 billion
- Dividend yield: Northward/A
If in that location were ever a company that has proven its ability to adapt in a hurry, it would be Walt Disney (DIS, $140.03). The pandemic hands could have been Disney'southward undoing. Its theme parks were closed or had limited capacity for months. Its movie business was dead on inflow. And even its ESPN sports programming business was upended by the canceling or curtailment of virtually professional sports for months.
And yet, "the old saying that 'luck favors the prepared' can be applied to Disney'due south November 2019 launch of the Disney+ video service," says Argus Research annotator Joseph Bonner, who rates DIS shares at Buy. Suddenly, tens of millions of bored, homebound people had the itch (and the time) to stream hours of Disney, Marvel and Star Wars content.
Disney+ was an instant hit and absolutely crushed expectations, sending Disney's shares sharply higher in 2020. Yet, DIS shares came back down to earth in 2021 and are off about 25% from their 52-calendar week highs.
Only hither's the thing: Nothing has changed. Disney+ is still emerging as the strongest competitor to Netflix (NFLX) and boasts a truly unrivaled itemize of content information technology'due south assembled over the decades. Disney'southward flick business organization is back, as evidenced by the flurry of Marvel superhero movies planned. And the theme parks … did you really think they'd stay down long?
"We expect EPS to double in FY22 every bit the company recovers from the pandemic, with more than normal though even so stiff 17% growth in FY23," Bonner says.
At today's prices, the communication stock trades at roughly the same levels it did immediately before the pandemic struck. But Disney's empire has only grown since then. That, and a share lull in late 2021, has DIS poised to exist one of the best stocks to buy for 2022.
- Industry: Application software
- Market value: $67.0 billion
- Dividend yield: Northward/A
The Uber Technologies (UBER, $34.54) ride-sharing platform operates in 63 countries and 750 markets, connecting riders with drivers. Uber Eats triangulates customers, restaurants and drivers. The visitor also has an emerging freight business.
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Uber reached an of import milestone in the third quarter of 2021, turning a profit (earlier interest, taxes, depreciation and amortization expenses) for the first time.
The visitor that pioneered "mobility as a service" is a top net stock pick at BofA Global Research, peculiarly every bit urban centers reopen post-pandemic.
Even though earnings per share remain probable to exist negative in 2022, BofA analysts, citing the company'due south improved financial position, an increasing supply of drivers and marketplace share gains, believe the stock could merchandise at $64 over the next 12 months – an 85% proceeds from current prices. That very likely would exist plenty to put it amid 2022's best stocks.
- Industry: Medical care facilities
- Marketplace value: $3.8 billion
- Dividend yield: N/A
A few months ago, Kiplinger's Personal Finance columnist James A. Glassman recommended AB Pocket-size Cap Growth (QUASX): a fund that has notched a sensational 29.8% annualized return over the by five years.
At present, he'southward tapping QUASX for one of his all-time stocks to buy for 2022.
AB Small Cap Growth has been adding to holdings of Louisiana-based LHC Group (LHCG, $121.33), a provider of mail service-acute care, including home health and hospice services, in more than than 700 locations.
As the population ages, healthcare is a growth manufacture. And the stock appears well priced after setbacks from hurricanes and because healthcare workers were forced to quarantine due to COVID-19.
- Manufacture: Net content and information
- Market value: $11.4 billion
- Dividend yield: North/A
IAC/InterActiveCorp's (IAC, $126.81) business is acquiring other businesses, improving their online operations, and so spinning them off. Dating website Match.com and the video-sharing platform Vimeo are two recent rehab projects. The strategy generates huge amounts of cash intermittently, which the company pours into new ventures, but earnings can be lumpy.
IAC's recent understanding to buy Meredith, the publishing visitor, may provide steadier recurring revenues as soon equally 2022. "That's a cash cow," says David Marcus of Evermore Global Advisors.
InterActiveCorp's shares are upwards 24% over the past 12 months, beating the South&P 500 by 7 per centum points. Simply Marcus still sees value because he says the sum of the parts is worth more than the electric current price of IAC stock.
- Industry: It services
- Market value: $eight.8 billion
- Dividend yield: Northward/A
Dan Abramowitz, of Hillson Financial Management in Rockville, Maryland, is Glassman's go-to expert in smaller companies.
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His selection for 2021 was IEC Electronics, which was purchased by Creation Technologies in October for 53% more than the stock's price when Glassman put it on the listing, noting, "IEC is also a potential takeover target."
For the best stocks to buy for 2022, Dan recommends DXC Engineering science (DXC, $34.91): a midsize information technology visitor based in the suburbs of Washington, D.C.
It is in the midst of a turnaround, Dan writes, "yet we are still in the early innings here." Profits are improving, only the stock "is valued at under 10 times current fiscal year earnings."
- Industry: Internet retail
- Market value: $334.7 billion
- Dividend yield: North/A
A Chinese crackdown on big tech companies has weighed on shares of this e-commerce behemothic. China slapped a tape $2.75 billion fine on Alibaba Grouping (BABA, $123.47) after an anti-monopoly probe last bound. All told, shares lost more than 60% betwixt their October 2020 pinnacle and the end of 2021.
Some analysts, even bullish ones, have trimmed sales and earnings expectations given sluggish economic and e-commerce conditions in Mainland china.
That said, GoodHaven Capital Direction portfolio manager Larry Pitkowsky, who likes a bargain with good growth prospects, bought shares in 2021 with expectations that BABA might be among the best stocks to purchase for 2022.
Alibaba is the leading due east-commerce company in China. Growth going forwards might be less robust, simply shares are inexpensive and trade at 12.5 times earnings estimates for 2022 – a 66% discount to its long-term boilerplate forwards price-earnings ratio of 37.
- Industry: Electronic components
- Market value: $6.3 billion
- Dividend yield: 0.8%
The more technology pervades our life, the more than Littelfuse (LFUS, $257.02) stands to gain. The business firm designs and makes fuses and circuits – small only necessary components – for consumer electronics, cars and industrial equipment.
Cars these days come up with heated seats, power steering, lane alter assistance and a heated steering wheel, amidst an increasing list of other things. Each characteristic requires its own fuse and excursion. Plus, Littelfuse dominates both the electronics and motorcar markets.
The stock is off 19% in 2022, merely Robert Due west. Baird Disinterestedness Research analyst Luke Junk still sees upside for shares, especially when auto production returns to normal and supply-concatenation bottlenecks clear.
"Net, nosotros see a expert setup for GARP-focused investors in 2022, with the stock gain offering more bonny upside and valuation post-obit recent market-related weakness," he says.
- Manufacture: Copper mining
- Marketplace value: $56.1 billion
- Dividend yield: 0.8%
Allegiance Counselor Growth Opportunities Fund (FAGAX) is red-hot, ranking in the elevation 3% of funds in its category for v-yr returns as of the end of 2021. The problem is that information technology carries a whopping 1.82% expense ratio and is sold mostly through advisers.
Still, you lot tin can browse its portfolio for ideas.
Almost of the fund'south holdings are tech stocks, but the only new purchase for 2021 amid its superlative 25 holdings was Freeport-McMoRan (FCX, $38.20), the minerals (copper, golden, argent) and oil and gas producer.
The stock climbed 61% in 2021. But its P/E ratio, based on analysts' consensus projections for 2022, remains a reasonable 15. That, combined with an influx of Washington spending via the $1.two trillion Infrastructure Investment and Jobs Act, could put FCX among the best stocks for 2022.
- Manufacture: Capital markets
- Market value: $168.1 billion
- Dividend yield: 0.nine%
In that location's piffling in financial services that Charles Schwab (SCHW, $88.89) doesn't do. It'south a brokerage firm, a money manager, corporate retirement plan administrator and a bank. And it has been gobbling up assets under management (AUM) with new accounts and acquisitions. Its TD Ameritrade conquering pushed full AUM to $7.4 trillion.
Rise interest rates will be icing on the cake in 2022. Every 0.25-percentage-point improvement in rates means another $750 meg to $950 million in earnings, or about 30 to 38 cents per share, says portfolio manager Andy Adams at Mairs & Power Growth Fund (MPGFX).
Wall Street analysts project that almanac earnings will climb 12% in the new year's day, and even more in 2023. Just note that unlike some of 2022'south other top stock picks, Schwab is not exactly inexpensive. At $89, SCHW trades at 23 times year-ahead earnings.
- Industry: Farm and heavy construction machinery
- Market value: $7.v billion
- Dividend yield: one.3%
There's infinite numbers of things we don't know even so about 2022. That's office of the appeal of a new year's day: that blank slate and thrill of the unknown.
But we exercise know this: Our authorities just passed into constabulary 1 of the largest infrastructure bills of the past several decades. Then, whatever happens in 2022, nosotros can expect to see a lot of money flowing into infrastructure-related spending.
This should exist a boon to Oshkosh (OSK, $112.53). Oshkosh builds specialty trucks like cement mixers, truck mounted cranes, "cherry pickers" and other hydraulic lifting systems. Whatever major expansion in infrastructure spending will mean demand for Oshkosh's products.
But apart from firsthand infrastructure spending, Oshkosh is interesting for another significant reason. It's a leader in heavy-duty electric vehicles.
President Biden was forced to scale dorsum some of his green ambitions in the infrastructure bill and the companion social spending beak. Simply renewable energy is still a major policy priority, and the Biden administration awarded a contract to Oshkosh to update the mail truck fleet in part with electrical trucks.
If yous believe in a greener future, Oshkosh is a good way to indirectly play it long term. And thanks to some barm coming off in the back half of 2021, OSK could be 1 of the best stocks to buy for 2022.
- Industry: Medical distribution
- Market value: $28.eight billion
- Dividend yield: 1.four%
AmerisourceBergen (ABC, $137.88) distributes pharmaceutical products in the U.Due south. and internationally. Customers include retail and mail-order pharmacies, infirmary networks, outpatient facilities, long-term care facilities and veterinarian practices.
Nine of xv firms who cover the stock recommend it, with CFRA particularly bullish, rating the shares a Strong Purchase. Analyst Garrett Nelson says aging baby boomers, rapid biologic drug development and strong pet buying trends are driving demand for the company's drugs.
Nelson said in 2021 that the stock could trade at $140 over the next 12 months – a target that assumed a bourgeois toll-to-earnings (P/E) ratio of just over 12, which is a steep discount to the stock's 10-year average P/E of 15. ABC has neared that in 2022, prompting the annotator to lift his price target to $160, implying another 16% of upside.
Potential risks include drug-price regulation and opioid litigation.
- Industry: H2o utilities
- Market value: $28.6 billion
- Dividend yield: 1.v%
Founded in 1886, American H2o Works (AWK, $157.51) is a water utility that sells water and wastewater services to residential, commercial, industrial and municipal customers.
Argus Research analyst John Staszak says he expects results to benefit from charge per unit increases and from efforts to lower operating and maintenance costs as a per centum of revenues. Moreover, the visitor has significant opportunities to acquire smaller, less efficient utilities.
The stock is not inexpensive, selling at 33 times Argus'southward estimate of $4.eighty a share in earnings for 2022. However, "we think that a higher multiple is warranted given the company's skill as an acquirer, potent regulated businesses, and history of dividend increases," Staszak says.
This is a much more defensive pick than many of the other meridian stocks for 2022. However, Argus's price target of $205, combined with the dividend, implies a potential 12-calendar month total return of about 32%. That would be a stellar twelvemonth for near utility plays.
- Industry: Industrial real estate
- Market value: $115.seven billion
- Dividend yield: 1.half dozen%
In that location are certain trends that were in place long earlier anyone had always heard of COVID-xix and volition be effectually long afterwards the current omicron variant is a distant memory. The rise of e-commerce is one of them. Amazon.com (AMZN) and its brethren are taking over the world.
But knowing this, why shouldn't nosotros turn a profit from it as Amazon's landlord?
Lucky for united states, we can. Prologis (PLD, $156.44), a real estate investment trust (REIT), is the industry leader in logistical real estate. Information technology likewise happens to be a major landlord to Amazon and other e-tailers.
Net shopping is sleek. It feels clean and modernistic. Only none of those mouse clicks amount to anything without the underlying infrastructure to actually fulfill the orders. That'southward where Prologis steps in.
To put some real numbers to information technology, a shocking 2.v% of the world's Gdp – or more $2.2 trillion – already flows through Prologis properties. And as east-commerce continues to grow as a percentage of the total, it's a skillful bet that Prologis will grow right along with it. The visitor already owns nearly a billion square feet of space in properties spread beyond nineteen countries with an occupancy rate of 96.6%.
Prologis is not just one of the best stocks to buy for 2022. It's one of the best stocks to buy and concord for the side by side 20 years. Shares yield i.6%, which is merely slightly meliorate than the market. But PLD has more than than doubled its payout since 2013.
- Industry: Diversified banks
- Market value: $375.one billion
- Dividend yield: i.8%
The avails of Berkshire Hathaway (BRK.B), Warren Buffett's holding company, accept become more and more diversified over the years. At concluding report, the company owned 40 publicly traded stocks.
Berkshire Hathaway's largest belongings by far is Apple (AAPL), at nigh 43% of the equity portfolio. Guess what'due south second? Bank of America (BAC, $46.43), at nearly 15%.
Glassman says he is a longtime fan and shareholder of BofA as well. Fiscal stocks in general could be amid the best stocks to buy for 2022 given the potential for interest rates to rise. BAC, which trades at less than 15 times side by side yr'due south earnings estimates despite a 54% rally over the past 12 months, looks particularly good.
- Industry: Restaurants
- Market value: $110.4 billion
- Dividend yield: 2.0%
Glassman's contrarian bias paid off in 2021 when he shook off his disastrous 2019 choice of Diamond Offshore Drilling (it went bankrupt) and scored a double with Oneok (OKE).
Searching for value again, he has arrived at Starbucks (SBUX, $95.94), which took a big (and to his mind, unwarranted) hit over the summer when the company warned of a slower recovery in Mainland china.
Glassman is "taking reward of skittish investors" and recommending Starbucks, one of the world's best-run companies, growing steadily with 33,000 outlets worldwide.
- Industry: Pharmacy and healthcare plans
- Marketplace value: $143.5 billion
- Dividend yield: 2.0%
Most Americans live inside iii miles of a CVS chemist's. But CVS Health (CVS, $93.10) is more than than a drugstore; information technology'southward an integral player in each link of the entire health concatenation.
"You get your jab at the pharmacy and while you're there, you might popular in the Infinitesimal Clinic for a pocket-sized ailment and buy Tootsie Rolls on your way out," says John Buckingham, editor of The Prudent Speculator.
Its Caremark division is a major drug benefactor, and its healthcare benefits subsidiary Aetna serves 39 1000000 people. Plus, this top stock for 2022 trades at less than 13 times expected earnings for the year ahead – a discount to its 10-twelvemonth average forward P/Eastward of 14.
- Manufacture: Industrial real estate
- Market value: $64.4 billion
- Dividend yield: 2.2%
Some other Glassman choice comes from a Schwab Global Real Estate Fund (SWASX) belongings: Singapore-based UOL Group (UOLGY), with an office, residential and hotel portfolio.
The fund's tertiary-largest belongings is Public Storage (PSA, $367.33), owner of 2,500 facilities in 38 states, and Glassman likes it as one of his best stocks to buy in 2022.
"Is there a better business concern? Every yr, I get an e-mail notice telling me my storage-unit of measurement rental has risen in price, and what am I going to do near it? Moving my stuff out is a horrifying idea," Glassman says. "I accept always wanted to own this stock. It is expensive, merely waiting might make it more then."
- Industry: Asset management
- Marketplace value: $33.9 billion
- Dividend yield: two.8%
The Value Line Investment Survey is a font of succinct enquiry that has a strong forecasting record also. One of Glassman's strategies is to pick from stocks that Value Line rates tops ("1") for both timeliness and safety. At the terminate of 2021, that list was short: nine companies, including obvious ones such as Apple (AAPL) and Visa (V).
The outlier is T. Rowe Price (TROW, $147.97), the Baltimore-based asset manager, whose earnings accept risen each year since 2009 despite the growing popularity of low-cost index funds.
Value Line notes that "shares have staged a dramatic advance over the by twelvemonth. However, our projections suggest … worthwhile appreciation potential for the next three to five years."
- Industry: Specialty real estate
- Market value: $78.five billion
- Dividend yield: 3.2%
Allow'south ask a rhetorical question here: Practise you see yourself using more mobile data, or less, in the years ahead?
Yous really don't need to answer that. We all know the answer. Unless you decide to go live off the grid, you're going to utilise more data.
That brings us to Crown Castle International (CCI, $181.68), a real manor investment trust specializing in cell towers. The REIT owns a network of more than 40,000 cell towers, more than 80,000 small-scale cells (such as those used for 5G) and approximately 80,000 route miles of cobweb cablevision. Crown Castle has a presence in every major U.S. market and has been in this basic line of work for more than than 25 years.
2022 will see the continued growth in "smart everything": the smart home, the internet of things, democratic driving and even the smart metropolis. All of this requires data and the communications infrastructure to collect it and process it. And Crown Castle volition be smack-dab in the center of this trend.
At current prices, CCI yields a trivial more than 3%. And importantly, the REIT is a serial dividend raiser, having additional its payout at a 9% chemical compound annual rate since establishing it in 2014.
CCI could be among the best stocks for 2022 ... and much farther down the route. Barring the introduction of some new revolutionary technology that of a sudden makes towers obsolete, it'south difficult to imagine any scenario in which Crown Castle doesn't enjoy a solid decade ahead.
- Industry: Retail real estate
- Market value: $38.nine billion
- Dividend yield: iv.2%
After the breakneck tech- and growth-focused bull market of the past several years, we might be looking at a different kind of market in 2022.
Tiring of the volatility, investors may prefer the tortoise over the hare.
And that's where triple-net retail REIT Realty Income (O, $68.67) really stands to shine. Realty Income is a landlord specializing in high-traffic retail backdrop that are generally immune to competition from e-commerce. Its largest tenants are convenience stores, pharmacies and dollar stores, but information technology also has a healthy allocation to restaurants (approximately 8% of portfolio), motion picture theaters (approximately 5%) and to health and fitness properties including gyms (approximately 6%).
Realty Income's stock price got beaten upwardly during the pandemic, and the shares have yet to fully recover. But it'southward important to point out that the REIT'due south diversification and bourgeois business model allowed information technology to become through the pandemic without whatsoever real take a chance to its business. Realty Income actually managed to raise its dividend every single quarter of 2020 and 2021.
Information technology'due south difficult to see anything simply a worst-case scenario with omicron or another COVID variant having much of an touch here.
Realty Income has paid 618 consecutive monthly dividends and has raised its payout for 97 sequent quarters as of this writing, and those numbers seem probable to only abound in the months ahead. On top of that, Realty Income yields more than iv% at electric current prices.
Come what may in 2022, Realty Income seems like a solid bet.
- Industry: Integrated oil and gas
- Market place value: $258.seven billion
- Dividend yield: four.ii%
We might hope for a greener future. But good sometime-fashioned oil and gas is however what keeps the global economic system moving.
Many of the growth and tech names that lead the bull market of the past decade wait stretched. And then investors scouting out the top stocks to purchase for 2022 might wait to more than traditional value plays in 2022.
Energy supermajor Chevron (CVX, $134.20) fits the bill.
CVX trades for 13 times expected 2022 earnings and sports a dividend yield of more 4%. That's remarkably inexpensive in a market that, by several measures, is the most expensive information technology has been since the bubble years of the late 1990s.
Energy stocks are unloved and under-owned. As recently as 10 years ago, the energy sector made upwards thirteen% of the Due south&P 500. Today, they make upwards about two%. Some of this is due to green mandates to diversify abroad from oil and gas, though near is simply due to the fact that energy stocks have endured a truly miserable oversupplied marketplace since belatedly 2014.
But here'due south the thing: No market stays oversupplied forever. And the brutal environment of the past several years forced many marginal operators out of business and many marginal projects offline. And as a issue, today we have a healthier marketplace. Supply and demand are in balance, and energy prices enjoyed a overnice bounciness in 2021 (and have connected the momentum into 2022).
Time will tell whether this trend continues. Additional COVID variants could pop up and dampen need for oil. But several analysts outfits see higher oil prices in the new twelvemonth, including the Wells Fargo Investment Institute, who sees a 17% to 31% rise to betwixt $85 and $95 per barrel.
And who wouldn't want to own a shares of a true survivor trading at a major disbelieve to an otherwise expensive marketplace?
- Industry: Retail existent estate
- Marketplace value: $3.iii billion
- Dividend yield: half dozen.7%
The final of our 22 all-time stocks to buy for 2022 is the one with the highest dividend yield: EPR Properties (EPR, $43.79).
News of the omicron variant really spooked the market place following Thanksgiving weekend 2021. Afterward months of painstaking efforts to reopen the earth following the COVID pandemic, here was the possibility that it might all go into reverse.
What we've learned since then is that omicron is more contagious, but less lethal, than previous strains. And while it caused a massive spike in new COVID cases, politicians have had little appetite for a return to large-scale lockdowns. Barring a major turn for the worse, the reopening merchandise should re-emerge.
That's nifty news for EPR – a REIT that owns a diverse portfolio of properties centered around entertainment and experiences. Theme parks. Ski resorts. Fifty-fifty Topgolf driving ranges. And all of these businesses were booming before the pandemic knocked them of grade.
But perhaps none of EPR's holdings took more than abuse than its movie theaters, which currently make up about 44% of revenues. Theaters were airtight for much of the pandemic, and to the extent they were open, in that location was nothing to watch. We only started seeing major releases in theaters again in recent months. And in fact, EPR has plans to reduce its exposure to this business concern in the years alee.
In 2021, Americans relished doing all of the things they couldn't do in 2020. Nosotros're going to encounter a continuation of that theme in 2022, and EPR is very well placed to benefit. The shares still trade well earlier their pre-COVID levels and yield a fat 6%-plus.
If you lot run across life getting increasingly back to normal in 2022, it makes sense to own EPR.
Charles Sizemore was long CCI, O and PLD equally of this writing.
Source: https://www.kiplinger.com/investing/stocks/stocks-to-buy/603893/22-best-stocks-to-buy-for-2022
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