Why Luke Lango says 2022 will be big for growth stocks … the sector Luke believes will see the most growth next year … signs of surging momentum
Theoretically, making big money in stocks is simple…
Correctly anticipate what’s coming, position your money there early, then watch your wealth soar as investors wake up to the opportunity and stampede into it.
Today, you’ll learn what’s coming as we peek into the latest issue of Early Stage Investor from our hypergrowth expert, Luke Lango.
In it, Luke highlights seven industries he believes have explosive growth potential in 2022. Today, we’ll fill you in on #1.
You might think of it as the “sleeping giant” of the green energy push.
Luke believes 2022 will witness a massive inflection point for this sector, leading to huge returns. Better still, whatever gains we see next year will be dwarfed by this sector’s decade-long performance. That’s because this is a multi-year growth story that’s just beginning.
So, what’s Luke’s #1 growth sector for 2022?
Let’s find out.
***Why 2022 will be a strong year for tech/growth sectors
For newer Digest readers, Luke is our hypergrowth expert, and the analyst behind Early Stage Investor. His specialty is finding market-leading tech innovators that are pioneering explosive trends, capable of generating outsized investor wealth.
He’s also something of a prodigy. From a perfect score on his SATs, to an illustrious academic career at CalTech, to being the #1-ranked analyst (out of more than 15,000 investment experts) on TipRanks, Luke is no stranger to success.
Given this background, when he’s bullish about a sector or trend, we pay attention.
So, what’s the growth sector that Luke believes will explode next year?
Before we answer that, we should begin with a broader question – why are we even confident that growth sectors will do well at all next year?
Don’t rising yields and inflation threaten to derail growth stocks, which typically perform poorly in such market environments?
In answering that, Luke points to the year 2016:
The 10-year Treasury yield rose 8% as the Fed entered a rate hike cycle and investors got concerned about the multidecade downtrend in yields breaking (and that, in turn, led to a break in the multiyear uptrend in tech stocks).
Sound a lot like 2021? It is.
From where we sit today, we believe this year is a lot like 2016.
Luke explains that five years ago, the Fed was on the cusp of entering a rate hike cycle. Meanwhile, inflation was picking up, economic growth was picking up, and bond yields were heading higher.
He notes that we have a nearly identical situation today.
Back to Luke:
Guess what happened in 2017…
The market got it wrong.
Inflation cooled. Economic growth slowed. Yields flatlined.
And that was all despite the Fed raising rates multiple times throughout 2016 – in a sign that even rate hikes couldn’t offset the powerful deflationary force of technology making everything cheaper, faster, more productive, and more convenient.
So, throughout 2017, yields flatlined, and hypergrowth tech stocks retook their rightful place at the head of Wall Street.
Luke is confident we’re seeing history repeat itself. He believes next year will be a replay of 2017.
But what about inflation? It hasn’t proved transitory as the Fed predicted. And over the weekend, serial entrepreneur and the head of Twitter, Jack Dorsey, even predicted we’re about to see hyperinflation.
Cost-cutting and productivity-boosting technologies are more abundant today than they were back in 2017, so their deflationary impact is even more widespread and powerful.
Once current temporary inflation pressures subside – which they will in 2022, as emerging economies get control of COVID-19 and fully restore their supply chains – those cost-cutting and productivity-boosting technologies that are now ubiquitous will do what they’ve been doing for 30 years: push prices of everything lower.
Here’s Luke’s bottom-line on why growth investors have a greenlight as they look to 2022:
The Fed will remain dovish. Yields will stabilize around 2%. And, much as they did in 2017, hypergrowth tech stocks will break out in 2022.
So, with that behind us, what’s Luke’s top sector?
***The sleeping giant that’s about to wake
We’re seeing a massive, global push toward green energy.
And despite the inevitable headwinds that face a budding technology or sector, green energy is the future, given how global leaders are sizing up our climate challenges. On this note, we learned this morning that even top oil exporter, Saudi Arabia, is targeting net zero emissions by 2060.
As we look at green energy, there have already been huge capital flows into smaller sub-segments like solar and wind. But there’s one area that hasn’t been on the receiving end of these massive allocations…and that’s about to change.
Our favorite hypergrowth industry for 2022 is the hydrogen industry.
Our big-picture thesis is that hydrogen is the most slept-on clean energy source in the world today.
It has unique advantages over other clean energy sources due to its unrivaled energy density and transportability. These advantages – which are insurmountable, since they are rooted in the unchangeable scientific truth that hydrogen is the lightest element in the universe – allow for the creation of hydrogen fuel cells that will forever be denser than any battery.
This density feature offers big benefits because denser fuel cells mean longer driving ranges and faster refueling times compared to batteries.
And in stationary markets, it means more consistent and robust power output.
Back to Luke:
In the long run, hydrogen won’t take over the world – but it will become the de facto clean energy source in long-range, high-usage transportation and stationary markets. Think trucks. Ships. Planes. Forklifts. Data centers.
***Why 2022 will be the breakout year for investors
Luke is the first to say that hydrogen has yet to catch-on with the investment community in the same way as solar and wind.
But he sees that changing next year for one main reason – momentum.
From the Early Stage Investor issue:
There has been a ton of momentum in the hydrogen industry as we wrap up the year.
The industry’s leading company – Plug Power – has announced a flurry of big business developments and partnerships in October, including: 1) a huge partnership with SK E&S to provide hydrogen fuel cell (HFC) systems to customers throughout Asia; 2) an equally huge partnership with Airbus to study hydrogen’s use in air travel; 3) an investment in Airflow, an aerospace company making electric aircraft; and 4) a memorandum of understanding with Phillips 66 to advance the latter’s low-carbon hydrogen business opportunities.
Luke then provides a laundry list of additional stories illustrating surging momentum in hydrogen. It’s far too long to include today, but below are a handful. Keep in mind, all of these come from October alone:
- Air Products announced intentions to build a $4.5 billion blue hydrogen (from methane gas) production facility in Louisiana.
- INEOS – Europe’s largest hydrogen producer – said it would invest $2.3 billion on electrolysis plants to make green hydrogen across Europe.
- Repsol committed to investing $2.5 billion in renewable hydrogen projects by 2030.
- Mitsubishi committed to developing widespread hydrogen infrastructure across the U.S.
Here’s Luke’s overall take:
Clearly, business momentum and deal flow are building rapidly in the hydrogen sector, and we believe this sets the stage for this promising industry to unlock significant commercial and economic success in 2022.
That’s why hydrogen is our favorite hypergrowth industry for next year.
If you’re unsure how to play hydrogen, a simple answer is to look at the GlobalX Hydrogen ETF (HYDR). Its top holding is Plug Power, which Luke highlighted above as the industry’s leading company.
If you’re interested in more concentrated bets, Luke has already earmarked a handful of top picks and plans to officially recommend them in Early Stage Investor when the right opportunity presents itself.
To be a part of this as one of Luke’s subscribers, click here.
In any case, keep your eyes on the hydrogen sector. If Luke is right, expect next year to mark the beginning of a massive growth story.
Have a good evening,