These are 10 of the top stocks to invest in for 2022.
It’s been a bad year for stocks. Through June 22, the benchmark S&P 500 is down 21.1%, the tech-dominated Nasdaq is down 29.4% and even the blue-chip-heavy Dow Jones Industrial Average is down 16.7%. Inflation has been the main culprit, with the debate over whether higher prices were transitory coming to an abrupt end as prices rose, for months on end, at the highest pace in roughly 40 years. The Federal Reserve, at first slow-moving and now rushing to respond, has begun a tightening cycle not seen in decades, including the single-largest interest rate hike in 28 years in June. Combine that with the unexpected Russian invasion of Ukraine and sky-high energy prices, and Wall Street hasn’t had much to cheer in 2022. With that in mind, here’s a look at how U.S. News’ picks from December 2021 of the 10 best stocks to buy for 2022 are faring thus far.
EOG Resources Inc. (ticker: EOG)
The best-performing of U.S. News’ 10 best stocks to buy for 2022 is EOG Resources, a U.S. oil and natural gas producer. Picked largely as a hedge against ongoing inflation, EOG hasn’t disappointed, jumping 29% through June 22 as energy prices have spiked — U.S. benchmark crude oil briefly eclipsed $123 per barrel — and inflation continues to climb, with the consumer price index showing its fastest increases in more than 40 years after year-over-year readings of 8.3% in April and 8.6% in May. EOG was even humming in the first quarter of 2022, with adjusted earnings per share, or EPS, surging 147% year over year. The company also declared a special dividend of $1.80 per share — following up a $1 special dividend in February — due to its outstanding results. After EOG posted record adjusted earnings in 2021, analysts expect more records in 2022.
Grupo Aeroportuario del Sureste SAB de CV (ASR)
It might seem odd that Mexico-based airport operator Grupo Aeroportuario del Sureste is handily outperforming the broader market, but take a look at the numbers and you’ll see there’s good reason behind it. People around the world are ready to get back to their normal lives, and that’s exhibited in passenger traffic for ASR, which operates airports in Cancun, Mexico; San Juan, Puerto Rico; and Medellin, Colombia. Across those three locations and its 13 other airports in Mexico and Colombia, passenger traffic is up 13.5% in the first five months of 2022 compared with the first five months of 2019. It’s nice to own an occasional stock that’s more disconnected from U.S. markets, and ASR shows why. Colombian traffic in particular is surging, up 41.1% in May 2022 from the same month a year before; the country’s economy benefits from higher prices of its top exports, such as oil and coffee. ASR stock is up 2% through June 22.
Visa Inc. (V)
Increased global travel has also been a boon to credit card behemoth Visa, which is outperforming in the bear market, down 10% year to date compared to the S&P 500‘s 21% decline. Cross-border volume in the fiscal second quarter was up 38% year over year, an important area of Visa’s business where it earns more money per transaction. Visa’s enviable network effect is one of the strongest sustainable competitive advantages in the world of business: More than 70 million merchant locations accept Visa cards, and there are plenty of Visas in consumer wallets around the world, too — about 3.6 billion, in fact. Visa beat on both the top and bottom lines last quarter, boasting revenue and adjusted earnings per share growth of at least 23%.
Medifast Inc. (MED)
Medifast is a Baltimore-based weight loss management and multilevel-marketing company, with tens of thousands of salespeople, known as coaches, pushing its meal plans and products. Starkly different from other companies on this list, MED is the smallest company among the best stocks to buy, with a market capitalization of about $2 billion, and it boasts one of the highest dividends on the list at 3.7%. Trading at a measly 13 times earnings, MED’s business appears undervalued, especially given an immaculate balance sheet, a long track record of growth, and expected revenue growth of 19.5% and 14.2% in 2022 and 2023. Medifast hiked its dividend payout by 15% in March and is coming off a record quarter for revenue. Given its low multiple, strong, sustainable dividend and growth profile, MED is an out-and-out value stock at current levels. Down roughly 14% year to date, MED is still beating the market this year.
Alphabet, Google’s parent company, is an unbelievably vast concern. Of course, when an investor buys GOOGL, they’re gaining exposure to the world’s most dominant search engine, but also other operations such as Alphabet’s growing cloud business, its dominant YouTube video platform, and even its “moonshot” projects that include investments in self-driving cars and an effort to bring internet to 4 billion people on earth without it. The $1.5 trillion GOOGL grew revenue by 23% last quarter and trades for just 20 times earnings — that’s a fantastic deal in line with the current price-earnings ratio of the S&P 500. Through no fault of its own, GOOGL has been dragged down in 2022 by the mere virtue of being a tech stock in a rising-rate environment.
Microsoft Corp. (MSFT)
Big Tech behemoth Microsoft is next among the best stocks to buy for 2022. The company behind the Windows operating system and Office productivity software has been leaning into other avenues of growth in recent years, perhaps most notably through its $26.2 billion acquisition of LinkedIn in 2016 and the focus on its cloud computing arm Azure, which saw revenue surge 31% last quarter. Ever conscious of its need to find new growth avenues, Microsoft announced its largest-ever acquisition in January: a $69 billion purchase of video game developer Activision Blizzard Inc. (ATVI). If approved, the deal should make Microsoft the world’s third-largest gaming company and position MSFT to aggressively compete in the metaverse, should that concept take off.
Lowe’s Cos. Inc. (LOW)
Lowe’s was selected as one of the best stocks to buy in part as a play on the red-hot housing market. Its February earnings report helped bolster that thesis, as U.S. same-store sales rose an impressive 5%. In May, however, the tides turned, and U.S. same-store sales fell 3.8% year over year. Lowe’s blamed part of the results on “unseasonably cold temperatures in April” that hurt sales of outdoor seasonal products, but now rapidly rising rates are threatening to slow the housing market as well. In the long term, there’s still a severe housing shortage, and millennials aren’t going to stop needing homes. Despite the rough second quarter, analysts expect EPS growth of 12.5% in 2022.
ASML Holding NV (ASML)
Hammered by the rotation from growth stocks to value stocks, Dutch semiconductor equipment manufacturer ASML has had a rough go of it in the first half of 2022. That’s despite first-quarter sales that came in at the high end of its guidance and 49% gross margins in line with expectations. Meanwhile, ASML still enjoys a global monopoly on extreme ultraviolet, or EUV, lithography machines. EUVs are extremely bulky high-tech machines that etch ever-smaller patterns on microchips. With no end in sight to the global semiconductor shortage, EUVs selling for about $150 million a pop and double-digit growth in revenue and EPS figures expected in 2022 and 2023, the company still enjoys a robust moat and strong growth prospects. The company bought back more than 2 billion euros of its stock in the first quarter, reducing its share count by about 1%.
Meta Platforms Inc. (META)
Virtually everyone is familiar with Meta Platforms — although perhaps you know it by its former name, Facebook. Facing one of its annual public relations nightmares last year, the company decided to hurriedly change its name in an effort to emphasize the growing opportunity of the metaverse. Predictably, the nascent technology has been nothing but a cash vacuum, with the metaverse division, Reality Labs, incurring a $10 billion loss in 2021. The slow start to the metaverse, combined with the tech sell-off and headwinds from Apple Inc. (AAPL) iOS privacy changes dinging ad revenue, has made for a horrible start to the year for META, with the stock off more than 50%. On the bright side, META is trading for only 13 times forward earnings — half the valuation it was going for in early 2021 and a steep discount to the typical multiple assigned to the digital advertising giant.
Upstart Holdings Inc. (UPST)
Arguably the stock with the highest risk and potential reward on this list, UPST has been predictably crushed by the anti-growth market forces at work in 2022. The year began well, with an exemplary February earnings report showing that revenue surged 252% in the fourth quarter. Shares jumped more than 35% on the news. Fast forward three months, and shares then plunged more than 50% in a single day, as the artificial-intelligence-powered innovator in credit scores cut its full-year revenue forecast from $1.4 billion to $1.25 billion, citing two familiar demons: rising interest rates and a potential recession. While it’s little solace to long-term shareholders, new investors arguably have a fantastic entry point for UPST at these levels. UPST, which is both profitable and expected to grow revenue by 48% this year, trades for a reasonable 23 times earnings.
The best stocks to buy for 2022:
— EOG Resources Inc. (EOG)
— Grupo Aeroportuario del Sureste SAB de CV (ASR)
— Visa Inc. (V)
— Medifast Inc. (MED)
— Microsoft Corp. (MSFT)
— Lowe’s Cos. Inc. (LOW)
— ASML Holding NV (ASML)
— Meta Platforms Inc. (META)
— Upstart Holdings Inc. (UPST)
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Update 06/23/22: This story was published at an earlier date and has been updated with new information.