2021 is coming to an end. Undoubtedly, it was one of the strangest years in the lives of most people. Things simply haven’t normalized since the pandemic began, despite all efforts. That makes the already-difficult act of finding the best investments for next year even more of a challenge.
Suffice to say, overarching predictions regarding the stock market often miss the mark. Case in point, a Bloomberg survey conducted prior to the beginning of 2021 predicted the S&P 500 would close at 3,800 to end this year. As I write this, it sits at 4,635, not far from 52-week highs of 4,743.
Some predict there will be a massive cratering of the stock market in 2022. Others are less alarmist, believing things could continue on an upward trajectory. Overall, markets remain as difficult to predict as they’ve ever been.
The best we can do is attempt to find stocks with catalysts that can propel them higher and reasonably strong business fundamentals. That’s what the stocks listed below all have in common, making them some of the best investments for 2022:
- Uber (NASDAQ:UBER)
- PubMatic (NASDAQ:PUBM)
- Alibaba (NASDAQ:BABA)
- Moderna (NASDAQ:MRNA)
- Oshkosh (NYSE:OSK)
- Prologis (NYSE:PLD)
- General Motors (NYSE:GM)
Best Investments: Uber (UBER)
There are several strong reasons to believe ride-hailing and delivery giant Uber will be one of the best investments for 2022. The basic idea is that Uber uses what has been called a “two-pronged approach,” according to Joule Financial CIO Quinn Tatro.
CNBC reported that Tatro explained, “Their margins are going to increase as the ride-sharing movement comes back online … But the other side is that for those people that aren’t comfortable, they have a huge deliveries segment that is doing exceptionally well.”
The premise is that ride-sharing should increase as we move into 2022 and people become more comfortable interacting. That sounds a lot like predictions for 2021, which were based on the argument that vaccines would be released and an economic reopening would occur. That hasn’t exactly been the case, but the optimistic view is that we’re closer than ever.
UBS (NYSE:UBS) named Uber as its top pick for 2022 in the ride-hailing and delivery space in early December. Analyst projections certainly reinforce the idea that Uber has massive potential for next year. Target prices sit at $68.84 on average. If that two-pronged approach pans out, UBER stock will move much closer to that number from its current levels at $39.
PubMatic’s website states that its “cloud infrastructure platform for digital advertising empowers app developers and publishers to increase monetization while enabling media buyers to drive return on investment by reaching and engaging their target audiences in brand-safe, premium environments across ad formats and devices.”
The firm’s operating model relies on machine-learning algorithms, which help publishers sell digital ad space. Normally, advertising platforms sell to the highest bidder. That’s the quickest method to arrive at the highest revenue. However, PubMatic is as focused on selling relevant ad space as it is on maximizing revenue.
The company plays the long game: By prioritizing ad relevance over short-term profitability, the company believes it will win. The notion is that said advertising space will become more valuable over time.
That makes a lot of sense — and so far, that has been the case. The company recently posted its fourth consecutive quarter of organic revenue growth exceeding 50%.
According to Yahoo! Finance, companywide revenues are expected to hit $283.47 million in 2022, up roughly 25% from those expected this year. Wall Street overwhelmingly sees PUBM stock as a buy, giving it a target price of $52.90. That’s well above current $35 price levels and indicates analysts believe it will appreciate moving forward.
Best Investments: Alibaba (BABA)
A cursory glance at Alibaba’s price chart indicates that its woes have yet to abate. It looked like BABA stock had hit an inflection point in early October when Charlie Munger’s Daily Journal Corp. (NASDAQ:DJCO) nearly doubled its position in the Chinese tech giant in Q3.
That sent BABA stock moving upward from what looked like a 2021 low. Then in mid-November, Alibaba delivered a few pieces of disappointing news. The company’s Singles Day revenue grew at its slowest pace since its beginning in 2009. And Alibaba cut its revenue growth forecast to between 20% and 23% from an earlier 30%.
That news precipitated yet another fall for BABA shares, which now sit around $120. It has simply been blow after blow for the company.
But the optimistic outlook remains the same. The company recently announced a reorganization in which it will have two digital commerce teams — one for the international market and one for the Chinese domestic market. A new CFO will also step up in the new year.
BABA stock has more than halved since the prolonged series of issues began early in 2021. If 2022 sees a rebound, shares could easily rise above $200 again, which is what many expect.
Moderna has too many positives to consider skipping it in 2022. That isn’t to say it has been smooth sailing for the company that develops messenger RNA-based medicines. It hasn’t.
Recently, back in November, Moderna fell off a cliff when it posted its Q3 earnings. The issue was revenue guidance, which was lowered to between $15 to $18 billion for 2021. Then it bounced up again when the omicron variant renewed coronavirus fears yet again.
But, here’s the real point: Moderna should do better in 2022. The company let it be known that deliveries could shift to early 2022 because of supply chain issues leading to delays. It now looks like those earlier guidance numbers won’t be so bad.
Current expectations are that Moderna will record approximately $17.5 billion in revenue in 2021. Those same expectations are that the firm will record $20.3 billion in 2022. That hardly suggests Moderna is a one-and-done company buoyed solely by Covid-19 vaccines.
Rather, Moderna boasts a broad spectrum of mRNA based therapies currently in development. The company and stock won’t be going anywhere in 2022, making it one of the best investments for the new year.
Best Investments: Oshkosh (OSK)
There are a few overarching reasons to believe 2022 will be a strong year for specialty vehicle manufacturer, Oshkosh.
Oshkosh products have one catalyst in the form of an infrastructure bill that is one of the largest seen in decades. It’s the same general notion that has sent investor capital rushing into steel producers and heavy machinery manufacturing stocks. As the funding from that bill is distributed, Oshkosh stands to benefit. Its heavy equipment will be in demand.
The other reason that Oshkosh will be receiving increased press in 2022 relates to electric vehicles (EVs). Remember, Oshkosh ultimately won the 10-year contract to build the next-generation delivery vehicle for the United States Postal Service (USPS).
Oshkosh will be building a mix of internal combustion vehicles and electric vehicles. Pre-production is currently underway, with delivery of vehicles to begin sometime in 2023. That should mean as 2022 rolls on, we will be hearing more about production schedules. Thus, by the end of next year, it wouldn’t be unrealistic to expect OSK stock to move significantly higher.
2022, like all years, calls for some measure of safety and conservatism in investing. In my mind, that suggests real estate investment trust (REIT) Prologis could be one of the best investments for next year.
The firm leases logistics facilities to 5,500 customers across 19 countries. In the U.S. alone, it operates 3,260 buildings that cover 612 million of its nearly 1 billion square feet.
The firm is a logistics juggernaut, although you could easily skip over that fact. It counts a veritable who’s-who among its top ten clientele, including Amazon (NASDAQ:AMZN), FedEx (NYSE:FDX) and The Home Depot (NYSE:HD).
That’s all well and good, but I think one of the best ways to understand why Prologis is attractive relates to the power of logistics. $2.2 trillion of goods flow through Prologis-operated logistics centers each year. That accounts for 3.5% of the GDP in the countries where it does business.
PLD stock comes with a 63-cent quarterly dividend. If that holds through 2022 (it hasn’t been reduced since 2009) it’ll yield an extra $2.52 for investors. That is a big plus, but investors should really consider the logistics angle as well.
Best Investments: General Motors (GM)
It is no secret that legacy automobile manufacturers are headed full steam into an EV future. In fact, GM’s Ultium platform, a “dedicated EV architecture and propulsion system,” is beginning to find its way into the hands of customers.
That’s because GM began delivering both its GMC Hummer EV and its BrightDrop EV600 commercial delivery vehicle. Both vehicles are built on the Ultium platform and herald the beginning of GM’s EV era.
The reason to believe this should result in a strong 2022 for GM is simple: EV stocks are massively more valuable than their internal combustion counterparts. Three of the top five valued vehicle stocks by market cap are pure EV manufacturers.
And all of the major legacy manufacturers are quickly pivoting toward a rapidly diversifying EV product mix.
The idea is simple: As GM sells more EVs in 2022, its stock should increase in price. Its low P/E ratio –below 10 — should rise and move more in line with pure-play EV stocks, which garner much steeper valuations. That implies now is the time to move while GM stock is still relatively cheap.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.