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 a question mark. Many analysts expect 2022 to be more of 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.
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). In 2022, further gains may be ahead. The company has transformed itself into a profit engine, after years of losing money, and analysts expect the company to earn $8.17 per share in 2022. On top of that, Tesla will be opening two new gigafactories in 2022, in Texas and Germany, and this should increase its production greatly. With a market cap now exceeding $1 trillion, Tesla is on a seemingly unstoppable roll.
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 $500, or about 45% above current levels (as of Dec. 16).
Disney is a long-time Wall Street darling that has been nothing but disappointing to investors thus far in 2021. As of Dec. 16, Disney stock is down about 17% 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, particularly if the coronavirus pandemic recedes. The company’s main business lines — filmed entertainment, cruise ships and theme parks — all stand to recover from any return to normalcy. 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 think they’ll never be the same, even if they survive. That is countered by the fact that before the pandemic cruise business was booming, and pent-up travelers are likely to flood back onto ships as soon as the pandemic is in the rear-view mirror. The bottom line with cruise stocks such as NCL is that they’ll have rough sledding and plenty of financial turmoil until things return to normal. But if you believe we’re closer to the end than to the beginning of the pandemic, cruise lines are likely to rebound strongly on the backs of firmer pricing and high customer demand. As of now, Norwegian Cruise Line trades a whopping 70% below its all-time high of $63.76 set in 2015.
PayPal almost single-handedly changed the payment processing world, but it has had an absolutely dismal 2021. As of Dec. 16, the stock is down about 19% YTD. While PayPal’s growth has slowed a bit, it’s still generating significant profits and is down about 40% from its all-time high. If and when the economy fully recovers from the pandemic, 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 earning 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 likely will flounder through the end of 2021 due to year-end tax-loss selling, it could be ripe for a recovery by the end of 2022.
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 2.49% dividend (as of Dec. 16). Most of the stock’s 27% YTD gain came in January, and the stock has more or less flatlined since then, perhaps preparing itself for its next leg up.
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 even after a spectacular 138% YTD gain in 2021. But the company has new life based on its shift toward self-driving and electric vehicles. The company’s new F-150 Lightning is emblematic of the “new Ford,” with nearly 200,000 reservations chasing 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 2% and still trades 52% below its all-time high of $42.45 set way back in 1999.
Adobe Inc. is another high flyer that got creamed on Dec. 3, trading down over 8% in sympathy with DocuSign. 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. Even after the December setback, Adobe remains up over 13% YTD (as of Dec. 16).
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. With the continuing spread of the Delta coronavirus variant, the new Omicron variant and others likely to come, Pfizer’s COVID-19 vaccine looks like it will have more legs than originally thought. The company expects 2021 and 2022 revenue from its vaccine to reach a staggering $65 billion. Beyond its vaccine production, Pfizer still has a healthy drug pipeline, sizable free cash flow and a 2.6% dividend yield as of Dec. 16.