As 2022 dawns, the stock market is facing continued uncertainty about the coronavirus, global supply chain woes, rising inflation and a central bank that has telegraphed tightening monetary policy.
Equities are near all-time highs, but the market could be at an inflection point.
“When the Fed kept the liquidity spigots open, investors preferred corporate debt to Treasuries, stocks over bonds, and speculative growth over value,” according to a note from Peak Capital Management. “These trends of the last several years are likely to reverse starting in 2022.”
With that backdrop in mind, here are three hot stocks to buy right now:
— EOG Resources Inc. (ticker: EOG)
— Ford Motor Co. (F)
— Ross Stores Inc. (ROST)
EOG Resources Inc. (EOG)
After getting crushed by flagging global demand during the height of the pandemic, the oil and natural gas companies that survived have rebounded along with EOG. Oil and gas prices have been ascendant as demand fueled by the global economic recovery has outstripped supply constrained by production discipline among drillers.
The Peak Capital note says “energy is likely to lead all sectors in 2022 as oil prices rise above $80 and valuations are very low today.”
Rising oil prices are one factor fueling increasing consumer prices.
Kunal Sawhney, CEO of Kalkine Group, points to oil and gas explorer and producer EOG Resources as “one of the best stocks to buy in times of inflation.”
With a market capitalization of more than $50 billion, this leading energy company is large enough to weather ups and downs in the energy markets, with its survival of the pandemic-sparked nadir in the sector as evidence.
The stock gained more than 78% in 2021, but it’s still well below its high above $132 from 2018. Its forward price-earnings ratio is about 9, and its trailing P-E is about17.
“What’s interesting is that it trades at a discount despite a significantly higher oil price — a critical factor setting the stage for further gains,” Sawhney says. “It has a proven track record to rise along with energy prices.”
Ford Motor Co. (F)
Even as demand for oil and natural gas ramps up as people travel more and businesses start producing more goods, demand for electric vehicles that don’t run on gasoline is also rising.
The recently passed $1 trillion infrastructure plan includes $7.5 billion for electric vehicle charging stations, with the goal to have 500,000 public stations by 2030.
“On the back of Tesla Inc.’s (F) success, EV stocks have been all the rage in the last year or two,” says Sam Boughedda, equities trader at AskTraders. “Just the mere mention of a company delving into the electric vehicle market has resulted in said company’s share price surging, regardless of whether it has even sold any vehicles yet.”
While that dynamic could end up creating winners and losers among electric vehicle, some companies do seem to be ahead of others. Boughedda points to Ford, which is investing heavily in electric vehicle manufacturing and said in December it expects to become the world’s second-largest maker of the vehicles within two years.
With plans to boost production capacity to roughly 600,000 by 2023 and high demand for its electric F-150 Lightning model, “Ford is definitely one to watch,” Boughedda says. TSLAelectric vehicle investors
Ross Stores Inc. (ROST)
For those with $40,000 or more to drop on a new electric pickup truck, inflation might not be as much of an issue as it is for those with lighter wallets. But those people need clothes too, and Ross Stores is one of the go-to retailers for those looking for a deal on new clothing.
Also, the chain of discount stores may have some runway for price improvement as the economic recovery gets people shopping in-person more. Still, pandemic-related curtailments could pose a risk to department stores.
“Consumer discretionary opportunities can be found as the retailing space in the U.S. is still yet to recover,” says Matt Benkendorf, chief investment officer with Vontobel Asset Management’s Quality Growth Boutique. “For example, Ross Stores has underperformed despite euphoria around consumer spending coming back thanks to the flush of savings.”
Up more than 7% in the last month, TJX is entering 2022 with some impressive momentum.
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