As summer begins with a bear market and the possibility of a recession looms, investors are wondering which stocks to place their bets on. While the analyst community expects volatility to continue in the near term, it also anticipates that stocks will rally this summer, even if only due to typical seasonal fluctuations.
Needless to say, it’s important to keep a close eye on the market and make your own judgments.
Investment opportunities can come from many different sectors, and you should remain vigilant to find the best options for you and avoid any expensive mistakes. If you’re looking to buy stock in 2022, here’s what you need to know.
Top 10 Stocks To Consider in 2022
Before we dive deeper into which stocks you should be buying in 2022 and why, here’s a quick rundown of the top contenders. All statistics are current as of June 20, 2022.
|Lithia Motors Inc.||$270.11||$7.815 billion|
|Travel + Leisure Co.||$40.00||$3.417 billion|
|Mueller Industries Inc.||$50.86||$2.894 billion|
|First BanCorp||$13.13||$2.593 billion|
|Herc Holdings Inc.||$88.84||$2.655 billion|
|Devon Energy Corp.||$58.02||$38.29 billion|
|Marathon Oil Corp.||$24.15||$17.091 billion|
|Qualcomm Inc.||$120.99||$135.51 billion|
|Berkshire Hathaway Inc.||$399,022||$592.1 billion|
|Micron Technology Inc.||$55.75||$62.254 billion|
Stocks With Growth Potential for 2022
When companies have a strong leadership team, strong sales, a large audience and a good growth market, they offer solid long- and short-term opportunities for investors. Here are some to consider investing in for the current year.
1. Lithia Motors Inc. (LAD)
Lithia Motors is a U.S. automotive retailer that operates 278 stores and sells products via 300 websites. In addition to selling new and used domestic, foreign and luxury vehicles and related financial, warranty and insurance services, Lithia operates auto maintenance and repair services and sells parts under the brand names Driveway and Green Cars. The company covers all the automotive market bases — buyers and those priced out of the market who’ll have to repair their existing cars instead of replacing them.
Lithia is a dividend-paying stock. LAD is also value-priced right now, with a price-to-earnings ratio of 6.43, and analysts call it a “strong buy.”
2. Travel + Leisure Co. (TNL)
Formerly known as Wyndham Destinations, Travel + Leisure is a hospitality products and services company that operates vacation ownership and travel and membership segments in the U.S. and internationally.
The company benefited from a return to travel in the first quarter of 2022, with record sales per guest for timeshares. Revenue was up 35% year over year. Analysts rate the stock a “strong buy” and set an average price target of $75.13.
3. Mueller Industries Inc. (MLI)
Mueller Industries manufactures and sells aluminum, brass and copper, as well as plastics, in North America, the U.K., the Middle East and China. The Tennessee-based company was founded in 1917. Its operating segments include piping, industrial metals and climate.
A strong first quarter has helped Mueller shares remain relatively stable, and analysts say the short-term outlook is positive. They rate the stock a “buy” and call it undervalued — not surprising given its low 5.13 P/E ratio.
4. First BanCorp (FBP)
First BanCorp is the holding company for FirstBank Puerto Rico, which serves retail, commercial and institutional clients. The company’s quarterly and annual earnings and revenue results have been solid of late, and the stock pays a higher-than-average dividend yield of 3.66% following a 20% increase announced in April.
Analysts rate FBP a “buy.” Their average price target is $22.83.
5. Herc Holdings Inc. (HRI)
Herc Holdings is a Florida-based equipment supplier that rents out aerial equipment, air compressors, compaction, earthmoving and material handling equipment, trucks and trailers and lighting equipment. It also provides equipment maintenance, repair, training and labor, among other services.
In April, Simply Wall St. reported that shares could be trading as much as 42% below their intrinsic value. According to Yahoo Finance, the stock has a “strong buy” rating and an average price target of $198.88.
To measure stock performance, analysts and investors should take into account the stock’s potential and ability to increase its shareholders’ wealth during an estimated period. Here are some of the best-performing stocks to keep on monitoring throughout 2022.
6. Devon Energy Corp. (DVN)
This company’s stock price has recently gone up due to its capital return for shareholders, outstanding financial performance and geopolitical conditions that sent energy stocks soaring.
Earlier this month, Devon announced that it had entered into an agreement to purchase leasehold interest and other assets of RimRock Oil and Gas. The acquisition will increase Devon’s Williston Basin production by almost 15,000 barrels of oil equivalents per day and add over 100 undrilled inventory locations, according to Zacks Investment Research.
Devon’s stock has gained 31.71% since the beginning of the year and 123.47% over the past year.
7. Marathon Oil Corp. (MRO)
Shares of this stock have advanced over 47% since the beginning of the year, while the Dow and S&P 500 have lost considerable ground. The effects of the Russian invasion of Ukraine are certainly a factor, driving share prices to just below their 52-week high before falling back some in June.
A great deal of uncertainty exists around the short-term energy outlook, according to the U.S. Energy Information Administration, but analysts still recommend MRO as a “buy.”
When considering a stock, value investors tend to choose those trading for less than what they’re worth. The strategy includes measuring fundamental business metrics against the stock price with the hopes the price will rise alongside the company’s worth. Here are some of the best value stocks for 2022.
8. Qualcomm Inc. (QCOM)
Qualcomm is a major player in the wireless industry and a leader in the 5G and chipset market. While not without competition nipping at its heels, Qualcomm is a blue-chip stock with a 10-year history of increasing dividends, and analysts say it’s significantly undervalued right now, trading at 12.39 times earnings. Analysts at Zacks Investment Research expect this quarter’s earnings per share to rise 49% compared to the same quarter a year ago, and they expect a 46.8% increase for the fiscal year.
At about $120, QCOM is a bargain compared to its average target price of $202.67.
9. Berkshire Hathaway Inc. (BRK-A)
It might seem counterintuitive that the world’s most expensive stock could be considered a good value, but consider this: Berkshire Hathaway is a holding company for businesses representing dozens of brands in industries as diverse as insurance, freight rail transportation, utilities, furniture, confections, batteries and recreational vehicles, to name a few, and it’s helmed by one of the world’s most successful value investors.
Berkshire Hathaway shares are down over 10% since the beginning of the year and over 2% from a year ago. But the company is flush with cash it can use to gobble up growth stocks and buy back more shares, Seeking Alpha noted.
Diversified earnings, excellent management and a recent spending spree — a deal to acquire Alleghany, an insurance company, and the purchase of a 15% stake in Occidental Petroleum — which Barron’s says investors love, bode well for patient investors. Of course, most will have to buy a fractional share of the roughly $400,000 stock or pick up budget-priced Class B shares.
10. Micron Technology Inc. (MU)
Micron stock has taken a hit over the last year, but it checks a lot of boxes as a value stock — low price-earnings ratio, high earnings-per-growth forecast over the next year through the next five years, and a target price at least 50% above the current price. Analysts polled by Yahoo Finance rate the stock a “buy.” Their average price target is $108.54 in a range of $70 to $165.
Stephen “Sarge” Guilfoyle, Real Money columnist for TheStreet, believes that “demand for what Micron does will outpace supply and/or capacity for some time.” As for Micron’s financials, Guilfoyle noted that “the balance sheet is as clean as a whistle and gets high marks on the Sarge test.”
The stock market is in constant evolution, and those looking to invest need to pay close attention to its frequent ups and downs. When looking to invest in new stocks and diversify your portfolio, do your research and evaluate what’s best for you in the long run. The guide above is meant to give you some insight into some of the best options in the stock market nowadays. Be aware that these conditions may vary over time.
Good To Know
Experts recommend investing in stocks over bonds if your goal is growth and you have a strong appetite for risk. Although stocks are more volatile than bonds, historically, they have produced larger long-term gains. If investing in individual stocks is too risky for you, consider a mutual fund that invests in a basket of growth stocks.
Stock Investment FAQHere are the answers to some of the most frequently asked questions about investing in stocks in 2022.
- Will small caps do well in 2022?
- Small-cap stocks are set to keep climbing in the current year. According to stock analysts, these alternatives are projected to have an edge over their large-cap counterparts. In recent months, the small caps have significantly outperformed stocks in the S&P 500, Dow and Nasdaq composite.
- How do you pick stocks?
- When picking stocks, the main goal is often to find good value. If you're looking to diversify your portfolio, look for trends in earnings, company strength, debt-to-equity ratios and dividend yield.
- What are the best industries to invest in right now?
- The current global situation has drawn attention to many industries that hadn't been on investors' radar in previous years. Some of the best industries to put your money on nowadays are:
- – Artificial intelligence
- – Cloud computing
- – Green energy
- – Virtual reality
- – Sustainable industries
- – Transport
- – Cybersecurity
- – Pharma and healthcare
- – Biotechnology
- How do I buy stocks?
- You can buy stock through an online stockbroker, a full-service broker, or directly from the company. While you don't need a broker to buy stock, having a middleman could give you more options and simplify your life when investing.
Daniela Rivera-Herrera contributed to the reporting for this article.
Data is accurate as of June 20, 2022, and is subject to change.