In this article, we discuss the 12 best American stocks to buy in 2022. You can skip our detailed analysis of these stocks and the current market situation, and go directly to 5 Best American Stocks To Buy in 2022.
The beginning of 2022 brought along something investors hadn’t witnessed since the early days of 2020: wariness and apprehension. All major stock benchmarks saw their biggest quarterly losses in two years in just the first quarter of 2022, including a 4.6% decline for the S&P 500 as well as a 9% drop for the Nasdaq Composite. After what can only be called a turbulent January and February, March brought some much-needed relief to the U.S. stock market. The S&P 500 rose 3.6% during that month, providing some semblance of recovery from a torturous correction during the first two months of the year during which stocks had dropped by as much as 13% from their all-time highs.
That isn’t to say, that the market has recovered completely. In fact, many experts are concerned that the rising rates to control inflation might go too far and trigger a recession in the United States. Not to mention, the war in Ukraine has not only triggered a costly humanitarian crisis but also caused economic damage that will contribute to a significant slowdown in global growth in 2022 and add to inflation. According to the information provided by the International Monetary Fund (IMF), global growth is projected to slow from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023.
Although there are numerous flags that herald a recession, several market experts argue that the United States may avoid such a situation altogether. This belief apparently stems from the fact that consumers and corporations currently have healthy balance sheets. According to the Fundstrat’s Head of Research, the S&P 500 could surge to 5,100 by the end of the year as long as the US economy avoids a recession, representing a potential upside of 13% from the current levels.
As the year unfolds, investors are currently wondering which stocks to place their bets on. With the analyst community carrying a mixed bag of opinions, it’s important to keep a close eye on the market and make your own judgments. To that end, investors should probably focus on stocks with strong business fundamentals, resilience in the face of inflation, room for growth, and solid financial positions. Some of these stocks include The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Micron Technology, Inc. (NASDAQ:MU), among others.
Our Methodology
For this list, we focused on US companies with solid business fundamentals and growth incentives. We also took into account company financials, most recent quarterly results, and the analyst and sentiment around these stocks.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 924 hedge funds as of the fourth quarter of 2021.
Best American Stocks To Buy in 2022
12. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 61
Eli Lilly and Company (NYSE:LLY) is an American pharmaceutical company based in Indianapolis, Indiana. Founded in 1876, the company is best known for its clinical depression drugs Prozac and Cymbalta, with products sold in approximately 125 countries.
The company recently delivered upbeat profit and sales for the first quarter of 2022. According to its earnings report, the healthcare giant earned $2.62 per share on an adjusted basis, surpassing analysts’ estimates of $2.13 per share. Additionally, Eli Lilly and Company (NYSE:LLY) posted revenues of $7.8 billion, up 14.76% on a year-over-year basis, crossing expectations of $6.68 billion.
Earlier on April 29, Wells Fargo analyst Mohit Bansal raised the price target on Eli Lilly and Company (NYSE:LLY) to $305 from $280 and maintained an Equal Weight rating on the shares of the company. According to the analyst, Eli Lilly and Company (NYSE:LLY) has one of the best biopharma businesses out there, estimating top- and bottom-line growth at 11% and 21%, respectively.
According to Insider Monkey’s database, 61 hedge funds reported holding stakes in Eli Lilly and Company (NYSE:LLY) at the end of December 2021, with stakes worth $5.30 billion. This is compared to 62 funds in the previous quarter that held stakes worth $4.28 billion. Arrowstreet Capital is the biggest stakeholder in the company, with more than 2 million shares valued at approximately $591 million.
Similar to The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Micron Technology, Inc. (NASDAQ:MU), Eli Lilly and Company (NYSE:LLY) is one of the best American stocks to buy in 2022.
Here is what Saturna Capital Amana Funds has to say about Eli Lilly and Company in its Q4 2021 investor letter:
“Industrials and pharmaceutical companies were among the Amana Income Fund’s strongest performers in the fourth quarter. Industrials and pharmaceutical companies were among the Amana Income Fund’s strongest performers in the fourth quarter. Drug maker Eli Lilly is represented in the 10 Largest Contributors.”
11. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 63
Intuitive Surgical, Inc. (NASDAQ:ISRG) is an American corporation that is involved in the development, manufacturing, and marketing of robotic products that are designed to improve clinical outcomes of patients through minimally invasive surgery, most notably through the da Vinci Surgical System.
The company recently announced better-than-expected financial results for the first quarter of 2022. As per its earnings report, Intuitive Surgical, Inc. (NASDAQ:ISRG) reported an EPS of $1.13, beating market estimates by $0.05. The revenue for the quarter came in at $1.49 billion, an increase of 15.14% on a year-over-year basis, surpassing estimates by $62.12 million.
On April 22, Piper Sandler analyst Adam Maeder raised the price target on Intuitive Surgical, Inc. (NASDAQ:ISGR) to $316 from $310 and kept an Overweight rating on the shares. According to Maeder, the company’s Q1 revenue, procedure growth, and adjust earnings all came in ahead of Wall Street expectations and were solid, especially given the challenging landscape in the quarter.
At the end of the fourth quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Intuitive Surgical, Inc. (NASDAQ:ISRG), compared to 61 funds in the preceding quarter, with holdings worth $3.53 billion. Ken Fisher of Fisher Asset Management is the biggest shareholder of the company, with over 4.3 million shares worth roughly $1.54 billion.
ClearBridge Investments, an investment management firm, mentioned Intuitive Surgical, Inc. (NASDAQ:ISRG) in its Q4 2021 investor letter. Here is what the firm had to say:
“Intuitive Surgical, a maker of robotic instruments for soft tissue surgery, was another new health care addition. The market for soft tissue procedures is enormous, including those performed with the aid of the company’s DaVinci machines, whose three-dimensional imaging capabilities require smaller incisions, resulting in less nerve damage and bleeding and shorter patient stays. DaVinci machines are a $1 million-plus investment by hospitals that can be run continuously through the day, allowing for a greater number of procedures with less physician fatigue. Surgeons are trained on the device from medical school and residency on up. Combining the related training and supply chains, these purchases are very sticky. We see the opportunity for Intuitive Surgical to benefit from more indications for the devices, procedure growth, and greater sales in hospitals and surgical centers.”
10. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
One of the largest healthcare companies in the world, Johnson & Johnson (NYSE:JNJ) is a New Jersey-based corporation that develops medical devices, pharmaceuticals, and consumer packaged goods. Its top products include Tylenol, Stelara, and Invega, among other medical devices.
As of April 19, Johnson & Johnson (NYSE:JNJ), reported a 6.6% increase in the quarterly dividend, from $1.06 per share to $1.13 per share. The company also released its earnings report for the fiscal first quarter of 2022 on April 19, with a reported EPS at $2.67, surpassing market estimates by $0.10. Additionally, the company reported a revenue of $23.43 billion.
On April 20, Credit Suisse analyst Matt Miksic raised the price target on Johnson & Johnson (NYSE:JNJ) to $205 from $200 and reiterated an Outperform rating on the shares of the company. According to the analyst, Johnson & Johnson’s (NYSE:JNJ) Q1 results led off Med Supplies and Devices earnings with better-than-expected growth across most of its MedTech businesses.
As of Q4 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $7.3 billion in Johnson & Johnson (NYSE:JNJ), compared to 88 in the previous quarter worth $6.8 billion. Of these, Arrowstreet Capital reported holding 4.84 million shares worth $1.23 billion in Johnson & Johnson (NYSE: JNJ).
9. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is an American producer of computer memory and computer data storage including dynamic random-access memory, flash memory, and USB flash drives. Based in Boise, Idaho, Micron Technology, Inc. (NASDAQ:MU) is a major player in the semiconductor space.
Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 83 were long Micron Technology, Inc. (NASDAQ:MU) with stakes worth $5.5 billion. This is an increase from 63 funds in the preceding quarter, with stakes amounting to $3.84 billion. Paul Marshall and Ian Wace’s Marshall Wace LLP is one of the leading stakeholders in Micro Technology, Inc. (NASDAQ:MU), with over 5.4 million stakes worth approximately $507.3 million.
On March 30, Mizuho analyst Vijay Rakesh raised the price target on Micron Technology, Inc. (NASDAQ:MU) to $113 from $110 and kept a Buy rating on the shares. Based on the analyst’s notes, the company posted quarter-over-quarter growth in storage and computing, and longer-term tailwinds from product mix and content increases.
8. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 86
T-Mobile US, Inc. (NYSE:TMUS) is one of the largest mobile communication firms in the United States, offering voice and data services to millions of consumers. A decent US stock, the Washington-based wireless network operator outperformed forecasts for subscriber growth during Q1 2022. The company is reaping the benefit of its 5G cellular network leadership and saw its phone-bill customers increase by 589,000.
Among the hedge funds tracked by Insider Monkey, 86 were bullish on T-Mobile US, Inc. (NYSE:TMUS) at the end of the fourth quarter of 2021, with aggregate positions worth $6.06 billion. Andreas Halvorsen’s Viking Global is the biggest stakeholder in the company, with 13.14 million shares valued at $1.52 billion.
T-Mobile US, Inc. (NASDAQ:TMUS) is a stock several analysts are confident with. On April 28, Benchmark analyst Matthew Harrigan raised the price target on T-Mobile US, Inc. (NASDAQ:TMUS) to $205 from $200 and kept a Buy rating on the shares. According to the analyst, the company continues to separate itself from its peers on 5G performance, and also believes that the company’s pricing power is “a pivot point for stock price upside.”
ClearBridge Investments mentioned T-Mobile US, Inc. (NYSE:TMUS) in its Q4 2021 investor letter. Here’s what the fund said:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
7. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 110
NVIDIA Corporation (NASDAQ:NVDA) is an American multinational technology company that has become synonymous with the best semiconductors money can buy. The California-based company’s GeForce RTX 3090 is something you would find on every PC gamer’s wishlist, due to it being the fastest GPU on the market that serves both gaming and mining purposes.
The company posted an EPS of $1.32 by the end of the fourth quarter of 2022, which beat analysts’ estimates by $0.10. Revenue for the quarter was recorded at $7.64 billion, a staggering increase of 52.77% compared to the year-ago quarter, surpassing market estimates by $213.41 million.
On April 13, New Street analyst Pierre Ferragu upgraded NVIDIA Corporation (NASDAQ:NVDA) to Buy from Neutral with a price target of $280, citing what he sees as an attractive valuation, greater visibility on the “crypto-winter risk” and the company’s strong data center outlook.
NVIDIA Corporation (NASDAQ:NVDA) is a popular stock pick among elite hedge funds, and by the end of Q4 2021, 110 hedge funds held long positions in the company worth roughly $10.49 billion, compared to 83 hedge funds in the previous quarter with stakes worth $10 billion. Fisher Asset Management is the most prominent investor in NVIDIA Corporation (NASDAQ:NVDA) with stakes worth approximately $1.5 billion in the company.
RiverPark Funds, an investment management firm, NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter. Here is what the fund said:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
6. Salesforce.com, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 110
Salesforce.com, Inc. (NYSE:CRM) is an American cloud-based software that provides customer relationship management software and applications focused on sales, customer service, marketing automation, analytics, and application development. As work-from-home trends seem to be growing, the company seems favorably positioned compared to its peers in the tech industry to take advantage of digital workflows due to top products like Slack.
Earlier this March, Salesforce.com, Inc. (NYSE:CRM) reported that its earnings per share for the fiscal fourth quarter of 2021 were valued at $0.84, beating expert estimates by $0.09. Additionally, the company generated revenues of $7.33 billion, up 25.94% year over year, and outperformed market consensus by $84.15 million.
On April 25, Jefferies analyst Brent Thill declared a price target of $330 on Salesforce.com, Inc. (NYSE:CRM) alongside a Buy rating on the shares of the company. Although he acknowledges tougher near-term comparisons, the analyst calls Salesforce.com, Inc. (NYSE:CRM) a “great long term buy” due to what he calls multiple levers that support high-teens percentage growth, and the fact that the company is taking a pause on M&A to focus on integrating Slack.
According to Insider Monkey’s database, 110 hedge funds held long positions in Salesforce.com, Inc. (NYSE:CRM) by the end of the fourth quarter of 2021. Of these, the majority stakes were held by Akre Capital Management, making it the most prominent investor in Salesforce.com, Inc. (NYSE:CRM), with stakes worth approximately $711.56 million in the company.
Much like The Walt Disney Company (NYSE:DIS), Alphabet Inc. (NASDAQ:GOOG), and Micron Technology, Inc. (NASDAQ:MU), Salesforce.com, Inc. (NYSE:CRM) is a notable American stock with strong business fundamentals.
In its first quarter 2022 investor letter, Oakmark Funds, an investment management firm, mentioned Salesforce.com, Inc. (NYSE:CRM). Here is what the fund said:
“Over the past 20 years, Salesforce (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software. CRM earns 80% gross margins, grows 20% organically and virtually all of its revenue is recurring. It’s a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 5x next year’s revenues represents a significant discount compared to publicly traded comparables and private market values in the software space. We view this discount as an opportunity to invest in a great business at a good value.
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Disclosure. None. 12 Best American Stocks To Buy in 2022 is originally published on Insider Monkey.
