10 Of The Best Stocks To Buy In 2022
While the markets are volatile at the moment, these stocks could perform well in 2022
The stock markets are on a rebound after a correction in the first week of January. However, equities remain volatile due to the anticipated increase in interest rates in the U.S. Even in this environment; there are stocks that look set to outperform the market due to a confluence of internal fundamentals and positive macro factors. Below are 10 of the best stocks to buy in 2022 that can outperform the market.
Top 10 Best Stocks To Buy In 2022:
Every Year, Trading Education selects the top 10 stocks to buy. Here's a look at the best stocks to buy for 2022, and how each pick has performed recently.
- Microsoft (MSFT)
- International Business Machines Corporation (IBM)
- Taiwan Semiconductor Manufacturing Company (TSM)
- Intel (INTC)
- Qualys (QLYS)
- JP Morgan (JPM)
- Bank of America (BAC)
- Goldman Sachs (GS)
- Amazon (AMZN)
- Tesla (TSLA)
Best Stocks To Buy In 2022:
1. Microsoft (MSFT)
Microsoft (MSFT) had a stellar year in 2021, and by the end of the year, was up by 46%.
Microsoft's strong performance in 2021 was driven by several factors, key among them being the growing adoption of work-from-home. This triggered growth for most of its digital workplace tools throughout the year.
Microsoft took note of these developments in its 2021 investor report. The company noted that to better support managers and employees, it had developed a new guide called "Hybrid Workplace Flexibility Guide". This document provides information on how people can work from anywhere at any time, while still staying connected with their team members. Microsoft further noted that it was committed to building tools that will allow users to choose their own style depending on what works best.
Microsoft's performance in 2021 was also driven by growth in its cloud infrastructure services, especially its Azure platform. As of August 2021, Microsoft's Azure accounted for 48% of the cloud market, and its market share is growing.
2022 could be an equally good year for Microsoft as well. Besides maintaining growth in its traditionally strong businesses, Microsoft is also getting into the fast-growing Metaverse market.
In November 2021, just days after Facebook rebranded to Meta, Microsoft announced that it was getting into the Metaverse through its virtual world platform called Mesh inside its Teams App. Considering that the Metaverse is set to redefine entire industries, including the future of work, this could be a big deal for Microsoft. Analysts predict that the Metaverse could be an $8 trillion market by 2030.
When you combine the Metaverse and Microsoft's dominance in other aspects of technology, it's not hard to see why it is one of the 10 best stocks to buy in 2022. The potential is pretty high.
2. International Business Machines Corporation (IBM)
International Business Machines Corporation (IBM) did not have one of its best years in 2021. IBM gained just a little over 9%, which means it underperformed key indexes like the S&P 500.
That said, there were many positive improvements around IBM all through 2021. For instance, in 2021, IBM saw a significant increase in its free cash flows. IBM's free cash flow increased by 300 million dollars in 2021 to $11.1 billion, led largely by an increase in cash from its different operations.
IBM also made steps towards focusing more on its core businesses, which is a plus in terms of long-term value growth. One of the steps it made in this direction was the spinoff of Kyndryl. IBM was finally able to spin off Kyndryl in November 2021, and the stock ticked higher at the time. That's because of investor optimism on IBM's ability to now focus on value-driving core businesses.
That aside, there is a lot to look forward to that makes IBM a top stock to buy in 2022. One of them is that IBM now intends to focus more on its core businesses. In its investor report released in October 2021, IBM announced that it plans to evolve its portfolio by focusing on software and consulting. These two sectors will account for a little under half of the total revenue while delivering strong growth. IBM is also looking into Red Hat's strong growth rate serving as an integral part of this change-up strategy.
IBM is also set to benefit immensely from its investments in cloud services. While IBM cloud accounts for a small segment of the total cloud market, the company still generates a healthy return off cloud services. With the cloud market expected to grow at a compound annual growth rate of 19.1% up to 2027, there is every reason to be bullish on IBM and other cloud services providers.
3. Taiwan Semiconductor Manufacturing Company (TSM)
Taiwan Semiconductor Manufacturing Company (TSM) had a relatively weak year in 2021. It started the year in a selloff, then traded in a range for most of the year. While it started gaining upward momentum towards the end of the year, it was not enough to fully negate the value decline it had recorded throughout the year.
However, things look pretty upbeat for TSM in 2022. Revenues were on a growth path through 2021 but set a record in quarter 4 of 2021. Taiwan Semiconductor Manufacturing reported a greater than 21% jump in Q4 2021 revenue over the same period in the previous year. TSM's sales are attributed to improved global demand for their chips. Supply bottlenecks due to the pandemic further served to push prices higher in 2021.
Looking ahead, there is good reason to believe that TSM is a good stock to buy in 2022. That's because chip prices are only set to go higher in 2022. According to the World Semiconductor Trade Statistics, chip sales are expected to rise 8.8% in 2022 and hit a total of $601 billion. That's a 25% increase from total chip sales for 2021.
Besides the rising demand, chip prices are set to go up as well. Taiwan Semiconductor Manufacturing, the largest chipmaker globally, has announced that it will be hiking prices in 2022. This is a response to rising costs that are eating into its revenues.
Considering that TSM already enjoys a premium in its product pricing, a rate hike means even higher revenues. For this reason, TSM could gain significantly in 2022, making it one of the 10 best stocks to buy in 2022.
4. Intel (INTC)
Intel (INTC), like most chip stocks, had a weak year in 2021. Intel hugely underperformed major indexes like the S&P 500 to close the year by an insignificant 3.70%.
Interestingly, Intel's core metrics remain strong even as the stock underperformed. For instance, chip shortages kept prices high, and this was reflected in Intel's revenues in 2021. For instance, in Q3 of 2021, Intel announced revenue growth of 5% compared to 2020.
Besides rising chip prices, the company attributed this growth to innovation and better customer relations. At the time, the CEO, Peter Gelsinger, stated that Intel's focus on execution helped the company deliver new semiconductor processes and architectural advancements that will help them maintain their market lead over competitors like TSMC & Samsung. It also attributed its growth to strong recovery in the Enterprise portion of DCG and IOTG.
Going forward, these advantages could reflect in Intel's stock value all through 2022. Its core advantages in the market are likely to reflect in Intel's stock price in 2022 and beyond.
Intel's stock price in 2022 is also likely to benefit from a change in leadership at the C-level in early 2022. Intel stock ticked higher after the company announced through a press release that it had named Zinsner as its new finance chief finance officer. Zinsner will be responsible for all aspects of company finances, including accounting & reporting. Zinsner was a success at his former position in Micron, which is a plus for Intel.
Chip prices are on the rise too, a factor that will positively impact Intel and all chip companies. With these factors at play, and chip stocks starting the year on a positive note, Intel easily stands out among the top 10 stocks to buy in 2022.
5. Qualys (QLYS)
Despite the growing demand for cybersecurity services, Qualys (QLYS) hugely underperformed the broader market. By the end of 2021, it was up by just 5%.
However, QLYS's fundamentals were pretty strong all through 2021. For instance, while reporting Q3 results, the company reported strong growth in its core business segments.
Qualys noted that due to growth in cloud computing, revenues increased to $70 million, representing a 40% increase compared to Q3 of 2020. Qualys also noted that its vulnerability management detection and response solution (VMDR) has been adopted by 32 percent of customers globally.
Going ahead in 2022, there is a lot to love regarding QLYS stock. One of the reasons why QLYS is a worthy stock to buy in 2022 is that the cybersecurity market is a high-growth market. The cybersecurity industry is projected to grow at a compound annual rate of 13.4% over the next 10 years and could hit USD 346 billion by 2027, according to a study published in 2020. Qualys, being one of the bigger players in the market, could benefit immensely from overall market growth, making it a top stock to buy in 2022.
Besides broader industry growth, Qualys is quite an innovative company. Back in November 2021, Qualys announced that its Cloud View service had added an extra layer of security when coding. The goal is to help detect and deal with security risks before a piece of code is deployed.
Qualys came up with this innovation following an (ISC)2 Cloud Security report, which noted that misconfigurations are a huge problem for public clouds. They can only be detected after deployment leaving companies more vulnerable to attacks.
With such solutions to evolving problems, Qualys could record customer growth in 2022, a factor that could play out in its stock price all through 2022.
It is not surprising that analysts have a positive outlook for Qualys. For instance, Zack's consensus estimate for Qualys has increased to $3.41, or an increase of 5.6% from its prior estimate.
The Zack's report notes that Qualys has seen an increase in demand for its security solutions. This is attributed to organizations rushing major digital transformations and seeking cloud-based protection against cyberattacks. It further reinforces Qualys’ potential as a top stock to buy in 2022.
Check Out: 10 Best Growth Stocks To Buy For 2022
6. JP Morgan (JPM)
JP Morgan (JPM) had a stellar year in 2021 and closed the year higher by 19.33%.
JP Morgan's stock performance in 2021 was a reflection of the strong growth in revenues that it recorded in 2021. For instance, in Q3 of 2021, JP Morgan's net income grew by $2.2 billion to hit $11.7 billion. Revenues increased too, reflecting the growing adoption of JP Morgan's banking services. Specifically, the bank's net revenue increased by 8% to $6.2 billion in Q3, with growth coming from deposits and client investments.
In 2022, there is a high chance that JP Morgan will maintain its strong stock performance. One key factor that makes JP Morgan a top stock to buy in 2022 is the upcoming interest rates hike. In its latest minutes, the Federal Reserve indicated that interest rates could be going up pretty soon.
While this has dampened the mood for most stocks, banking stocks are looking pretty good. That's because banks stand to record higher revenues in a high-interest rate environment. For JP Morgan, one of the largest banks in the United States, this is a plus and makes it a top stock to buy in 2022 if you want a mix of stability and growth.
Besides a favourable macro-environment, JP Morgan is looking to expand its services in Asia, with a focus on the fast-growing private banking market.
This year, JPMorgan Chase & Co plans to boost its Asian private banking business staff by 100 people. A section of those to be hired will focus on China. This is informed by the fact that China's ultra-wealthy in need of private banking services are increasing in number, despite the regulatory hurdles that have come up in China recently.
With such growth potential and a favourable macro-environment, it is not surprising that analysts believe JP Morgan is a buy.
If it continues on its current trajectory, then JP Morgan could easily outperform most stocks this year. While markets can go either way, the odds are in its favour as a top stock to buy and hold in 2022.
7. Bank of America (BAC)
Bank of America (BAC) had a good year in 2021. It closed the year higher by 45%, much higher than most stock indices.
BAC's strong performance in 2021 was driven by solid results every quarter, throughout the year. BAC had a strong Q1 2021, and deposits rose by 25% to hit $924 billion. This was also the quarter that consumer investments shot up by 53% to hit a high of $324 billion.
Similar strong results were reported in Q2 when deposits rose by 21% to hit a high of $979 billion. In the same quarter, consumer investments rose by 40% to a high of $346 billion. BAC kept recording even higher earnings with every subsequent quarter until the year ended. The same was reflected in the stock price all through the year.
Looking ahead to 2022, there is everything to love about Bank of America. From the macro-environment to its internal fundamentals, there is a good chance that BAC could rally in 2022.
For starters, Bank of America is a dividend payer, which is a plus for investors looking for a mix of growth and stability. The bank has already declared preferred dividends for Q1 of 2022. With the equity markets highly volatile at the moment, dividend-paying stocks like BAC are likely to keep drawing in investors all through the year.
Bank of America is also set to increase its employee rewards, which is a plus in terms of keeping them motivated, and productive. According to a Bloomberg report, Bank of America Corp., the second-largest bank in North America with assets totaling over 600 billion dollars, is increasing its employee bonuses. The company plans to increase this amount by more than 40% for investment bankers. This is a big deal considering that investment banking is one of its key revenue drivers.
When you combine these internal factors with the fact that interest rates are set to go up this year, it is not hard to see why Bank of America is one of the top stocks to buy in 2022. The chances of it outperforming the market are pretty high.
8. Goldman Sachs (GS)
With interest rates set to go up this year, Goldman Sachs (GS) cannot miss amongst the top 10 stocks to buy in 2022.
Goldman Sachs had a stellar year in 2021 and closed the year higher by 31%. That's much higher than most stocks and stock indices.
Goldman Sachs's strong performance in 2021 had a lot to do with its fundamentals. This reflected pretty well in its financials. For instance, in Q3 of 2021, Goldman Sachs recorded an ROE of 22.5%. While announcing the results, CEO, David M. Solomon, stated that Q3 was a pivotal moment for Goldman Sachs. That's because they announced two strategic acquisitions that will play a critical role in driving growth going into the future.
Goldman Sachs, like most banks, started 2022 in the green, and the prospects look pretty good. For starters, it is investing in fast-growing companies that could positively impact its growth. For instance, Goldman Sachs is one of the backers of Project44, a $2.4 billion company that is focused on making supply chains more efficient.
With all these factors at play, the chances are that Goldman Sachs stock could perform well in 2022.
9. Amazon (AMZN)
After strong gains in 2020, Amazon slowed down in 2021. By the end of 2021, Amazon (AMZN) was up by just about 3%.
However, that does not mean that Amazon’s fundamentals weakened one bit. Amazon remains the market leader in the cloud business and is one of the most recognized online retailers globally.
With online retail on a growth trajectory, Amazon stands to keep recording strong revenues growth throughout 2022. The same can be said of its cloud services business, which is focused on one of the fastest-growing aspects of technology.
One of the key factors that make Amazon a top growth stock to buy in 2022 is a potential spinoff of Amazon Web Services. Amazon Web Services is a game-changer. It's not just Amazon anymore; it has become an essential part of what they do and how much money the company makes. Analysts believe AWS on its own is worth upwards of $1 trillion. Spinning it off could unlock value for the Entire Amazon group in an unprecedented way.
There is also talk of an Amazon stock split, a factor that could make Amazon more affordable to regular investors. This could see the value of the stock rocket through 2022.
With such big things potentially coming up, Amazon could be a big stock winner to buy and hold in 2022.
10. Tesla (TSLA)
Tesla (TSLA) had a good year in 2021 and closed the year higher by 25%. Tesla's strong performance in 2021 had a lot to do with growing demand, and its ability to deliver on orders.
2021 aside, Tesla has so much coming up that it easily stands out among the top stocks to buy in 2022.
For instance, Tesla has been granted permission to produce more test cars at its unfinished German factory, as it awaits final approval. This is a big deal and gives Tesla an edge towards growing its production capabilities.
Tesla has also entered into a deal with Talon Metals Corp. Through this deal, Tesla has secured an uninterrupted flow of metals and other parts needed to meet its growing demand for electric car batteries.
Analysts are pretty bullish too, with Goldman Sachs raising its price target for Tesla. Goldman Sachs believes that with the production of Model Y set to go up and new factories opening in Germany and Austin, Texas, Tesla's revenues could go up in 2022.
With Elon Musk at the helm and all these developments coming up, Tesla is easily a top stock to buy in 2022. Tesla is one stock that could easily rally by over 50% by the end of the year.
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