In this article, we discuss the 5 best stocks to buy before 2022. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks to Buy Before 2022.
5. Hologic, Inc. (NASDAQ:HOLX)
Number of Hedge Fund Holders: 41
Hologic, Inc. (NASDAQ:HOLX) is a healthcare equipment firm. The company, which makes and sells COVID-19 testing kits as well, has made smart investments from record profits generated in 2020 and 2021. These acquisitions, according to a bullish analysis on the stock by Evercore ISI analyst Vijay Kumar, are likely to result in a sustained growth profile in the coming months and have been received well at the market.
Hologic, Inc. (NASDAQ:HOLX) also has solid fundamentals. In earnings results for the fourth fiscal quarter, posted in early November, the firm reported earnings per share of $1.61, beating estimates by $0.60. The revenue over the period was $1.3 billion.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Hologic, Inc. (NASDAQ:HOLX) with 2.2 million shares worth more than $149 million.
4. Corning Incorporated (NYSE:GLW)
Number of Hedge Fund Holders: 42
Corning Incorporated (NYSE:GLW) markets display technologies, optical communications, environmental technologies, and specialty materials. The company recently announced that it was expanding a partnership with AT&T, under which Corning will invest $150 million for optical cable manufacturing in North Carolina. The stock will also benefit from increased government spending into communications infrastructure under the American Jobs Plan.
Deutsche Bank analyst Matthew Niknam recently initiated coverage of Corning Incorporated (NYSE:GLW) stock with a Buy rating and a price target of $45, noting that the “differentiated and high-quality products” of the firm were becoming part of everyday life.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Corning Incorporated (NYSE:GLW) with 5.1 million shares worth more than $209 million.
3. Coupa Software Incorporated (NASDAQ:COUP)
Number of Hedge Fund Holders: 54
Coupa Software Incorporated (NASDAQ:COUP) owns and runs a cloud-based platform that offers business spend management services. The firm recently beat market expectations on earnings for the second fiscal quarter and improved guidance. It beat 30% growth estimates and the demand trends for the company continue to improve. Needham raised the price target on the stock to $315 from $280 in September and kept a Buy rating.
Rob Bernshteyn, the CEO of Coupa Software Incorporated (NASDAQ:COUP), told CNBC in an interview earlier this year that the post-pandemic economy would likely increase interest in the product of the firm and that the sales pipeline of the company “was the largest it had ever been”.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Coupa Software Incorporated (NASDAQ:COUP) with 4.6 million shares worth more than $1.2 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Coupa Software Incorporated (NASDAQ:COUP) was one of them. Here is what the fund said:
“We started new investment campaigns in Coupa Software. Coupa is a leading provider of cloud-based business spend-management software. The company helps 1,400 customers process over $2 trillion in annual spend across more than 5 million suppliers. While this quarter’s announcement of a major new customer win at Walmart shows it still has a long runway for growth in this business, we are particularly excited about Coupa Pay—a recently introduced set of cloud services that seeks to process B2B payments (not just invoices) across its large network. B2B payments has seen far less innovation in recent years compared to B2C (PayPal, Venmo, Square), but we see it as a major opportunity in the years ahead.”
2. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ:ABNB) has several growth catalysts heading into the new year. Improved travel demand for 2022, a surge in vacation travel towards the end of 2021 as restrictions are lifted, and market-beating earnings results released in early November have all helped push the share price up 12% in the past week. Truist, DA Davidson, Wells Fargo, and Loop Capital have all raised the price target on the stock recently.
The stock has room to climb higher in the coming months. Airbnb, Inc. (NASDAQ:ABNB) revealed in the earnings report that it had booked over 79 million experiences in the third quarter, up 25% year-on-year. However, it was 7% below the figure for the third quarter of 2019, before the pandemic upended business, indicating that travel demand was still recovering.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Airbnb, Inc. (NASDAQ: ABNB) with 3.4 million shares worth more than $526 million.
In its Q2 2021 investor letter, Worm Capital LLC, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ:ABNB) was one of them. Here is what the fund said:
“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they
take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work.
In short, ABNB fulfills pretty much every element of a business model we’re attracted to: First, it’s highly scalable marketplace-based business model that unites buyer and seller with observable flywheel effects. (This is an important observation, in that the platform creates significant economic value for millions of hosts who rely on Airbnb, which in turn attracts new hosts who identify the opportunity, which creates more inventory, which turn attracts more travelers, which attracts more hosts, and soon.) Second, it has a global focus with significant opportunities to expand its operating leverage; Third,
its management—which is still founder-led—stands out to us as long-term thinkers capable of handling crisis, which the team demonstrated throughout the pandemic by dropping operating costs and turning the business into a more efficient, lean organization. (Like Churchill said: “Never let a good crisis go to waste.”)..”
1. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 87
Thermo Fisher Scientific Inc. (NYSE:TMO) markets analytical instruments, specialty diagnostics, and laboratory products. The company has a growing biopharma business, driven by the purchase of PPD, that is expected to continue driving revenue in the coming months. The firm has opened a biologics manufacturing site in Switzerland and recently launched new versions of mass spectrometry and chromatography solutions that were received favorably at the market.
Morgan Stanley analyst Tejas Savant on October 28 resumed coverage of Thermo Fisher Scientific Inc. (NYSE:TMO) stock with an Overweight rating and a price target of $700, appreciating the strong earnings beat of the firm in the third quarter.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $7.3 billion in Thermo Fisher Scientific Inc. (NYSE:TMO), up from 79 in the preceding quarter worth $6.2 billion.
In its Q2 2021 investor letter, DEVON Equity Management, an asset management firm, highlighted a few stocks and Thermo Fisher Scientific Inc. (NYSE:TMO) was one of them. Here is what the fund said:
“The broad response to the COVID pandemic from the healthcare, pharmaceutical, and life science industries has been nothing short of incredible.
Whilst Vaccine makers understandably garner the highest profile, Thermo Fisher (6.2% of NAV) should be considered one of the outstanding performers, reflected in their ‘COVID related revenue’ hitting US$9.4bn in the 12 months since March 2020 (we appreciate measuring ‘contribution’ to the pandemic by ‘dollars’ generated is a little crude – but ultimately it does tell us something).
Ever the short-termist, Mr Market has looked to the inevitable slowdown in COVID related revenue uneasily – questioning whether it might mean a decline in Earnings come 2022. These concerns resulted in TMO shares declining 5% since their November 2020 peak, the worst performer of our Top 10 holdings.
Fortunately, we look at the COVID dynamic for Thermo in the diametrically opposite fashion.
We think Thermo’s response to COVID has bolstered their competitive positon in multiple verticals, and meaningfully enhanced the long term earnings potential of the company:
Firstly, Thermo came from ‘also-ran’ to leading player in diagnostic testing in 6 months. In ordinary times, this might be expected to take 5+ years. As demand for COVID testing inevitably declines, the capacity Thermo built during 2020 will be filled with demand from non-COVID diagnostic tests, a fast growing area before the pandemic with improved prospects in light of the role testing is playing in the COVID response.
Secondly, Thermo invested heavily…”[read the entire letter here]
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