In this article, we discuss the 10 stocks that analysts are recommending for 2022. If you want to skip our detailed analysis of these stocks, go directly to Analysts are Recommending These 5 Stocks for 2022.
Analysts are backing the United States economy to get to a solid start in 2022 as consumer and business spending show no signs of slowing in the latter half of 2021 despite rising inflation, persistent staffing shortages, and supply chain disruptions. The surge in virus infections has also failed to hold back economists from forecasting annualized growth of 3.7% in the first half of 2022. The overall growth rate for 2022, according to the OECD Economic Outlook, will likely hover around 4.5% before downshifting in 2023.
Investment bank Morgan Stanley predicts that monetary policy will tighten in 2022 but not enough to discourage capital expenditures. Improving supply chains and other normalizing forces are expected to play their part in a strong economic outlook for the year. A strong capex cycle and increased inventory-building will also act as growth catalysts for the economy. Ellen Zentner, the chief US economist, expects commodity price increases to slow down as well.
Investors are also concerned about rising interest rates. Analysts contend that the Federal Reserve will raise interest rates in the latter half of 2022, with European authorities likely to wait until 2023 to do the same. There are risks to this outlook as well, which include a slowdown in China, fears around the rise of a new variant of COVID-19, and imbalances in the energy market. However, the overall outlook for 2022 remains mostly bullish.
According to an economic forecast by the Conference Board, the United States and China will power the global economic recovery with growth rates of 3.8% and 5.5%, respectively, in 2022. The China factor is often downplayed in analyst forecasts, given that the Chinese economy accounted for 30% of the global economic growth in 2021. Analysts have also claimed that a rise in interest rates, triggered by inflation, could dampen growth and be a “threat” to governments that have accumulated massive debts through the COVID-19 period.
Investors eager to exploit these forecasts to their advantage should consider some of the stocks that analysts recommend buying for 2022 that include NVIDIA Corporation (NASDAQ:NVDA), Bank of America Corporation (NYSE:BAC), and The Charles Schwab Corporation (NYSE:SCHW), among others.
Our Methodology
The companies that analysts from different investment advisories have recommended as a Buy heading into 2022 were selected for the list.
Hedge fund sentiment was included as a classifier as well. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Luis Louro / shutterstock.com
Analysts are Recommending These Stocks for 2022
10. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) makes and sells electric vehicles and clean energy equipment. New Street analyst Pierre Ferragu has a Buy rating on the stock with a price target of $1,580. In a recent investor note, the analyst backed the EV maker to register a revenue of more than $80 billion next year as the Shanghai-based production plant made new cars at an annual rate of 700,000, well above initial estimates of 450,000 units per year.
UBS analyst Patrick Hummel believes that Tesla, Inc. (NASDAQ:TSLA) will continue to beat top line growth and margins consensus expectations in 2022. The analyst touted the potential of the firm to grow market share in the coming months despite being the industry leader in EVs since it had better access to chips and batteries compared to competitors.
At the end of the third quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ:TSLA), the same as in the previous quarter worth $9 billion.
Just like NVIDIA Corporation (NASDAQ:NVDA), Bank of America Corporation (NYSE:BAC), and The Charles Schwab Corporation (NYSE:SCHW), Tesla, Inc. (NASDAQ:TSLA) is one of the stocks attracting the attention of elite investors.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
9. Littelfuse, Inc. (NASDAQ:LFUS)
Number of Hedge Fund Holders: 24
Littelfuse, Inc. (NASDAQ:LFUS) makes and sells electrical components. Baird analyst Luke Junk, in a bullish analysis on the firm, has forecast upside for the shares in 2022 as production of vehicles returns to normal and supply-chain disruptions ease. The high demand for electric vehicles, smartphones, and other electronic devices, all of which are made using products of the firm, is expected to help the stock as well.
In late October, Littelfuse, Inc. (NASDAQ:LFUS) announced that it would acquire Carling Technologies, a firm that manufactures switches and circuit breakers, in a deal worth $315 million as part of a plan to grow into the commercial vehicles business.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in Littelfuse, Inc. (NASDAQ:LFUS) with 823,932 shares worth more than $224 million.
In its Q4 2020 investor letter, Polen Capital Management, an investment management firm, highlighted a few stocks and Littelfuse, Inc. (NASDAQ:LFUS) was one of them. Here is what the fund said:
“Littelfuse was a detractor for the full year. Littelfuse is a leader in circuit protection, power control, and sensing technologies. Having monitored its slowdown in organic growth and lower margins, we became concerned that the company is more cyclical than before and vulnerable to the pandemic, so we exited our position in the second quarter in an effort to upgrade our Portfolio.”
8. American Water Works Company, Inc. (NYSE:AWK)
Number of Hedge Fund Holders: 28
American Water Works Company, Inc. (NYSE:AWK) provides water and related services. Argus analyst John Staszak has backed the company to benefit from rate increases and efforts to lower operating and maintenance costs as a percentage of revenues in 2022. In a recent note on American Water, the analyst said that “a higher multiple is warranted given the company’s skill as an acquirer, strong regulated businesses, and history of dividend increases”.
On December 8, investment advisory Barclays raised the price target on American Water Works Company, Inc. (NYSE:AWK) stock to $187 from $174 and kept an Equal Weight rating. Analyst Eric Beaumont issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in American Water Works Company, Inc. (NYSE:AWK) with 5.5 million shares worth more than $941 million.
7. Oshkosh Corporation (NYSE:OSK)
Number of Hedge Fund Holders: 31
Oshkosh Corporation (NYSE:OSK) makes and sells specialty vehicles. Baird analyst Mircea Dobre recently termed the stock a Bullish Fresh Pick following the passage of the infrastructure bill. As the US government ramps up infrastructure spending in 2022, Oshkosh, which manufactures cement mixers and cranes, could see an increase in demand for the products, driving up the share price of the firm.
The analyst noted that 2022 margins for the firm were “poised to accelerate as equipment pricing is catching up with higher input costs. The company is further differentiated by its ability to drive electrification/alternative fuels across wide portions of its portfolio which should continue attracting investor attention along with a clean balance sheet”.
In late November, Oshkosh Corporation (NYSE:OSK) announced that it had won a contract for the US Army worth $591 million that includes the delivery of 1,669 Joint Light Tactical Vehicle trucks, 868 JLTV trailers, and related parts by 2023.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Oshkosh Corporation (NYSE:OSK) with 730,991 shares worth more than $74 million.
In its Q3 2021 investor letter, FPA Queens Road, an asset management firm, highlighted a few stocks and Oshkosh Corporation (NYSE:OSK) was one of them. Here is what the fund said:
“Oshkosh Corporation posted increased earnings, but its shares slid during the quarter because the company announced significant supply chain issues and cost pressures. Given the current valuation and long-term prospects, we think the company remains an attractive opportunity.”
6. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 32
Prologis, Inc. (NYSE:PLD) is a real estate investment trust that focuses on high-barrier markets. As one of the major landlords to big ecommerce firms, including Amazon, the company stands to benefit from the macro trends favoring the real estate sector in 2022. RBC Capital analyst Michael Carroll recently highlighted that the firm had “historically strong property-level trends and the same store cash NOI growth should remain elevated for it over the next few years”.
Morgan Stanley analyst Vikram Malhotra recently kept an Overweight rating on Prologis, Inc. (NYSE:PLD) stock and raised the price target to $165 from $138, backing the firm to leverage organic growth and acquisitions to deliver over 10% total net operating income growth in 2022.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm AEW Capital Management is a leading shareholder in Prologis, Inc. (NYSE:PLD) with 2.1 million shares worth more than $270 million.
In addition to NVIDIA Corporation (NASDAQ:NVDA), Bank of America Corporation (NYSE:BAC), and The Charles Schwab Corporation (NYSE:SCHW), Prologis, Inc. (NYSE:PLD) is one of the stocks that hedge funds are buying.
In its Q1 2021 investor letter, Third Avenue Management, an asset management firm, highlighted a few stocks and Prologis, Inc. (NYSE:PLD) was one of them. Here is what the fund said:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that is primarily comprised of fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
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Disclosure. None. Analysts are Recommending These 10 Stocks for 2022 is originally published on Insider Monkey.
