In this piece, we will take a look at the 10 growth stocks for 2022. If you want to skip to the top five stocks in this list, then head on over to 5 Growth Stocks For 2022.
One of the biggest attractions of the stock market when it comes to investing hard earned money is the fact that should an investor be able to pick out the right companies, then over the years, or even in a short amount of time, the value of the invested funds can significantly grow. This growth in value often termed as the returns offered by the market, has been known to surpass the returns offered by the more traditional investment mediums such as government issued debt securities, commonly referred to as bonds or t-bills.
Retail investors have several options when choosing which stocks to pick for investing. Some of these include either picking out the companies themselves or choosing indexes as an investment vehicle. For the uninitiated, an index is a collection of publicly traded companies that are selected on different criteria. For instance, the popular Standard and Poor 500 index includes only American companies alongside using other metrics such as market capitalization, issued share classes, and trading volume.
Share price growth is often compared to the overall growth in the value of indexes such as the S&P 500 over a certain time period. For newer companies, if they are performing well, this value often surpasses the index growth, simply due to the nature of the mathematics involved in calculating the share price growth. For the larger ones, such as the Cupertino, California consumer electronics giant Apple Inc. (NASDAQ:AAPL), surpassing the S&P500 is a matter of pride since it reflects growing confidence in the company’s fortunes despite being a mature entity that has already captured a significant proportion of the total addressable market (TAM) of its selected industries. These, in Apple’s case, are the smartphone and the notebook markets.
In this list, however, we will focus on smaller firms, unlike the larger companies such as Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG). For reference later on, in 2021, the S&P 500, which had roughly $5.4 trillion in invested assets as of the end of December 2020, grew at 22.85% between January 18th, 2021, and 2022.
Our Methodology
The selected companies were analyzed through their quarterly earnings, investor letters, analyst ratings, and hedge fund sentiment generated via Insider Monkey’s survey of 867 firms for the third quarter of last year.
10 Growth Stocks For 2022
10. Viavi Solutions Inc. (NASDAQ:VIAV)
Number of Hedge Fund Holders: 23
Stock Price as of Feb. 16, 2022: $16.90
Viavi Solutions Inc. (NASDAQ:VIAV) is a diagnostics firm that works with telecommunications providers to enable them to improve their services and pick out errors in equipment.
Investment firm JPMorgan raised the company’s price target to $18 from $19 in January 2022, stating that the recent pullback is an attractive entry point for the stock
Michael Rockefeller and Kroeker’s Woodline PartnersKarl is Viavi Solutions Inc. (NASDAQ:VIAV)’s largest investor as it owns a stake of $47 million through 3 million shares.
Viavi Solutions Inc. (NASDAQ:VIAV) matches big ticket names such as Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) when it comes to share price growth.
9. United Microelectronics Corporation (NYSE:UMC)
Number of Hedge Fund Holders: 13
Stock Price as of Feb. 16: $9.81
United Microelectronics Corporation (NYSE:UMC) is one of the largest semiconductor manufacturers in the world. It is known for contract chip manufacturing, which involves chip foundries manufacturing chips for customers instead of for their own products.
JPMorgan set a NT$70 price target for the company in December 2021, stating that its margins will improve in the near future.
United Microelectronics Corporation (NYSE:UMC)’s largest investor is Jim Simons’ Renaissance Technologies who owns 7.3 million shares worth $83 million shows Insider Monkey’s research.
8. Dropbox, Inc. (NASDAQ:DBX)
Number of Hedge Fund Holders: 41
Stock Price as of Feb. 16: $24.96
Dropbox, Inc. (NASDAQ:DBX) is a digital collaboration platform that is aimed towards facilitating remote collaboration between regular customers and enterprise users. Its platform allows users to share their workflows and give feedback all from the comfort of a remote environment,
Dropbox, Inc. (NASDAQ:DBX) is also popular among hedge funds, as an Insider Monkey survey of 867 funds for Q3 2021 revealed that 41 had owned its shares.
Berenberg set the company’s price target to $25 in December 2021, sharing that while Dropbox, Inc. (NASDAQ:DBX) has good product strategies, it is facing pricing pressure.
Dropbox, Inc. (NASDAQ:DBX)’s largest investor is Jim Simons’ Renaissance Technologies who owns 9.5 million shares worth $280 million.
7. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 12
Stock Price as of Feb. 16: $30.75
Lithium Americas Corp. (NYSE:LAC) is a lithium mining company that sits right at the heart of one of the fastest growing markets in the world. Its products, mainly lithium, are used in manufacturing battery packs for electric vehicles, and the company has mines in Argentina.
Over the past twelve months, Lithium Americas Corp. (NYSE:LAC)’s share price has grown by 45%. Out of the 867 hedge funds part of Insider Monkey’s Q3 2021 survey, 12 had owned a stake in the lithium provider.
Deutsche Bank set a price target of $34 for the company in January 2022, justifying the decision by stating that price advantages will benefit the company.
Jay Chen’s Himension Capital is Lithium Americas Corp. (NYSE:LAC)’s largest investor as it owns a stake of $50 million through 2.2 million shares.
Massif Capital mentioned Lithium Americas Corp. (NYSE:LAC) in its Q1 2021 investor letter, outlining that:
“Lithium Americas: The volatility noted above in LAC has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.
High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on LAC that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on LAC will result in us owning the shares with committed capital of -$0.28 per share.
Although we believe in the fullness of time Lithium Americas Corp. (NYSE:LAC) warrants a $30+ valuation, the prices achieved in early January of this year were not justified by the underlying fundamentals. Some will argue we should have sold down our position. We had already established our option positions and believe LAC is an emerging major in the lithium mining industry. Thus, we decided to maintain the position unchanged. Although still relatively high, the current $15 per share valuation is not crazy compared to where we think the firm should be trading based on fundamentals, so we are no longer overly concerned with the position as is.
LAC management also took advantage of the volatility issuing stock on January 22 for $22 a share. The ~$400 million in proceeds will be used to develop Thacker Pass, the US-based clay lithium deposit, which will likely be the largest producing Lithium mine in America when turned on. In our opinion, the stock issuance could not have come at a better time. Lithium Americas Corp. (NYSE:LAC) management has advanced the project through various development stages (de-risking), but with the share issuance, they have significantly reduced the need to bring in an outside partner to develop the asset as the first phase of the project is expected to cost roughly $581 million. After-tax and at an 8% discount rate, the Thacker Pass project’s present value is approximately $2.6 billion (the firm’s current market capitalization is $1.5 billion). Although the share issuance was dilutive, increasing the total shares by 17%, we believe it will, in the long run, prove a forward-looking, value-additive decision by management.
The lithium market remains an area of interest and focus for us. This reflects our belief that the most exciting investment opportunities to capture secular trends in EV’s and batteries are found upstream in the mining industry. It is also a reflection that there is a greater diversity of lithium investment opportunities relative to other battery metals.”
6. Nokia Corporation (NYSE:NOK)
Number of Hedge Fund Holders: 22
Stock Price as of Feb. 16: $5.83
Nokia Corporation (NYSE:NOK) is one of the most well known companies in the world, famous for its cellular phones and other technologies. While the company struggled to keep up with the smartphone revolution, it is now at the center of the ongoing global shift to 5G telecommunications technologies.
Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is Nokia Corporation (NYSE:NOK)‘s largest investor through a $123 million stake via owning 22.6 million shares.
Morgan Stanley set a $7.5 price target for Nokia Corporation (NYSE:NOK) in December 2021, stating that the company is developing good product strategies for its 5G equipment.
Alongside heavy hitters like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOG), Nokia Corporation (NYSE:NOK) has also demonstrated remarkable share price growth.
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Disclosure: None. 10 Growth Stocks For 2022 is originally published on Insider Monkey.
