Investors could do nothing but cheer their returns in 2021, as the S&P 500 shook off the effects of the coronavirus pandemic and returned over 26% to investors through Dec. 16, 2021. Whether the same will be true in 2022, however, is still up in the air. So far, 2022 is looking like a “stock picker’s market,” meaning the broad averages may be lackluster but there will still be pockets of opportunities. Check with your financial advisor to see whether any of these names match your investment objectives and risk tolerance. Here is a wide range of stocks that may outperform in 2022 based on a variety of factors, from being undervalued to being oversold.
Rising Gas Prices: The True Cost of Going Electric
Also See: 22 Side Gigs That Can Make You Richer Than a Full-Time Job
Tesla has continued to outperform expectations for years now, following up its extraordinary 700% gain in 2020 with a 31% YTD gain in 2021 (as of Dec. 16). As of June 20, 2022, the stock has gone down 46% compared to last year. However, the company has transformed itself into a profit engine and Tesla plans to open two new gigafactories before the end of the year, which should increase its production greatly. With a market cap of $673.70, Tesla is on a seemingly unstoppable roll.
Live Updates: Financial Trends, Money News and More
Atlassian is the Australian-based software company behind products such as Jira, Confluence, Bitbucket, Trello and OpsGenie. The company’s software is primarily for software developers and IT departments, but it also helps small businesses collaborate and become more effective. Atlassian’s growth boomed during the height of the coronavirus pandemic, but it’s likely to remain in favor as even more companies are now familiar with how productive Atalassian’s software can make corporate teams, whether they are remote or return to the office. Consensus analyst estimates are a buy, with a 12-month median price target of $338, or about 83% above current levels (as of June 20).
Disney is a long-time Wall Street darling that has been nothing but disappointing to investors thus far in 2021. As of June 20, Disney stock is down about 40% YTD, while the broader markets are up about the same amount. This wide gulf in underperformance is uncharacteristic of Disney, which has generally provided solid and reliable long-term returns. After rallying sharply off the March 2020 market selloff, Disney has dropped precipitously from its all-time high of $203.02 set in March 2021. However, signs of life abound for a 2022 bounce-back, as the company’s main business lines — filmed entertainment, cruise ships and theme parks — all are reopened and generating revenue again. Disney’s vast treasure trove of content also should continue to fuel the company’s growth in its streaming service Disney+.
Norwegian Cruise Line (NCLH)
If you’re a bit of a gambler, Norwegian Cruise Line might grab your interest for a 2022 investment. The cruise stocks got hammered in 2020 — it seemed they would all go out of business during the height of the pandemic — and there are still some pundits who thought they’d never be the same, even if they survived. However, before the pandemic cruise business were booming, and after the world returned to normalcy, pent-up travelers flooded back onto ships as soon as the pandemic is in the rear-view mirror. While the pandemic greatly affected cruise stocks, the stocks on the rise again and cruise lines are rebounding on the backs of firmer pricing and high customer demand. As of now, Norwegian Cruise Line trades a whopping 48% below its market value this time last year in 2021, but higher than the 70% dip the the stocks stood at in 2020.
PayPal almost single-handedly changed the payment processing world, but it has had an absolutely dismal 2022. As of June 20, the stock is down about 63% YTD. While PayPal’s growth has slowed a bit, it’s still generating significant profits and posted $25.4 billion of revenues in 2021, which was up 18% from the year before. As Paypal continues to grow and reach more users, financial transactions are likely to increase, thereby benefiting PayPal going forward.
DocuSign rose to stratospheric levels in the early days of the pandemic as it seemed as if all business would be done remotely in perpetuity. As the world began opening up and business began returning to some sense of normalcy, faith in the company began to wane. After the company announced better-than-expected earnings and revenue in its third-quarter earnings report on Dec. 3, the stock got hammered based on fourth-quarter projections below analysts’ expectations. This whiff of decelerating growth absolutely hammered the stock, knocking it down some 40% in a single day. Although the stock is down 61% YTD, the company is set to grow 33% at a compound annual growth rate by 2030, making it a smart business to invest in this year.
JPMorgan Chase (JPM)
JPMorgan Chase may be favorably positioned for 2022. Banks traditionally perform better when long-term rates rise, as they’re able to lend money at higher rates while still paying lower short-term rates on deposit accounts. JPMorgan Chase remains cheap on a relative basis, at about 10x earnings, and it pays a healthy 3.54% dividend (as of June 20). Most of the stock’s 30% YTD decline came in January, and then the stock has more or less flatlined only to increase again this May before declining again. Despite a current decline, JPM is a reliable dividend stock with a 25% dividend payout.
Ford Motor (F)
Ford Motor has had a dismal run for the past two decades, with the stock trading about where it was in 2001 with a 48% YTD decline in 2022, as of June 20. But the company has new life based on its shift toward self-driving and electric vehicles. The company’s new F-150 Lightning was recognized as the “new Ford,” with nearly 200,000 reservations and a production schedule of only 15,000, 55,000 and 80,000 trucks in 2022, 2023 and 2024, respectively. The company pays a healthy dividend of 3.56% and still trades 48% below its all-time high of $42.45 set way back in 1999.
Adobe Inc. is another high flyer that has severely declined and stands at 36% YTD. Some investors took the negative outlook from DocuSign to mean that the pandemic boom was nearing an end and that Adobe would also suffer financially. But Adobe has been consistently firing on all cylinders for years on end, and those trends — on the back of the company’s cloud and subscription businesses — seem likely to continue. Despite some setbacks this year, Adobe has gone up 148% over the past five years and remains a valuable stock to invest in this year.
Pfizer has always been a defensive stock in times of overvalued markets, so if you’re of the belief that there’s a bubble forming, Pfizer might be a good option for you. But Pfizer is much more than a safe-haven stock. Pfizer’s COVID-19 vaccine has seen major revenue increases due to the pandemic and its revenue could reach $109 billion by the end of 2022. Beyond its vaccine production, Pfizer still has a healthy drug pipeline, sizable free cash flow and a 3.44% dividend yield as of June 20.
More From GOBankingRates