With the major market indices ending 2021 near record highs, analysts who have been cheerleading the meteoric rise appear to have justification for their bold claims. Having been burnt before by the 2008 financial meltdown, the natural reaction is skepticism. Yet ardent bulls claim that the best is yet to come for stocks to buy in 2022. Certainly, the immediate evidence points in that direction.
Still, I can’t help but think rampant speculation has never ended well throughout history. In a few articles for InvestorPlace, I’ve mentioned Yale economics professor Robert Shiller article on the New York Times about the public sentiment during the Roaring Twenties. If you approach the evidence that Shiller provides with intellectual honesty, you can’t help but feel the fervor aligns with what we’re seeing today for high-risk, high-reward stocks to buy.
One contributing factor that led to the great crash of 1929 was stock trading on margin. Retail investors who lacked the sophistication of their professional peers essentially borrowed money from brokers to buy popular securities. Things started to unravel when borrowers could no longer keep their account in the black, so to speak. While the situation hasn’t gotten that bad yet, the current speculation on risky stocks to buy harkens back to a dangerous time.
At the same time, I’m not crazy enough to bet against the market (at least not at the moment). I can’t help but remember the old adage: the market can stay irrational far longer than you can stay solvent. Still, it’s not wise to ignore some of the worrying signs. For instance, if popular stocks to buy in 2021 are still amazing, the executives of those issuing companies have a strange way of showing it.
Sure, the insider selling may be for perfectly legitimate reasons, such as tax considerations and portfolio rebalancing to account for inflation. But I think it’s also fair to ask, what do they know that we don’t?
In that spirit of skepticism, here are possibly safer and more reliable ideas for stocks to buy in 2022:
- Johnson & Johnson (NYSE:JNJ)
- Chevron (NYSE:CVX)
- DuPont de Nemours (NYSE:DD)
- Archer Daniels Midland (NYSE:ADM)
- Xylem (NYSE:XYL)
- Alarm.com (NASDAQ:ALRM)
- Squarespace (NYSE:SQSP)
Aside from a few longshots, I’m not shooting for the stars here. Rather, since we’re in the first month of the new year, it’s probably best to get your foot in the door with reasonable ideas. Later, we can explore some of the exciting stocks to buy as we digest important news items.
Stocks to Buy for the New Year: Johnson & Johnson (JNJ)
Typically a boring but stable name among healthcare-related stocks to buy, Johnson & Johnson met the cynical opportunity of the coronavirus pandemic with aplomb. Among the direct winners of the Covid-19 crisis, the pharmaceutical giant offered an intriguing alternative to the vaccines that Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) put forth.
Rather than a two-dose regimen, JNJ went with a single-shot approach. Also, while the Pfizer/Moderna vaccines require a six-month waiting period before patients can take a booster shot, JNJ participants can get their booster after just two months for those 18 years and older. It’s difficult to quantify but JNJ likely saved lives thanks to its vaccine’s more convenient profile.
Moving forward, prospective investors have reason to consider adding Johnson & Johnson to their list of stocks to buy. As the Covid-19 crisis fades into the rear-view mirror, demand for other medical needs will probably rise. As multiple sources reported, many chronically ill patients throughout the world put off care due to fears of the coronavirus.
Hopefully, circumstances will normalize soon, which bodes well for JNJ nearer term and longer term.
Back in 2020 when the coronavirus first upturned global communities, frequent drivers faced an eerie backdrop. Once bustling major metropolitan areas suddenly became ghost towns — or at least their streets did. As a result, gasoline prices were incredibly cheap, with oil contracts even dipping below zero at one point, an unprecedented situation for companies like Chevron.
While I probably speak for everyone in that we’re grateful that we’re gradually coming out of the mess, I’m also not the only one who hasn’t wished for some elements of the pandemic to stay with us: namely, cheap gas prices. True, I’m not driving that much these days. However, when I do, I certainly pay for it.
Now, the high cost of gasoline would normally bode well for electric vehicles. And EVs will likely take over the roads at some point. However, it’s also reasonable to point out that the electric transition may be delayed for a few years at least. That’s because, with consumers rushing to auto dealerships for used cars, demand for oil may logically increase.
Furthermore, if car prices plummet and recent buyers end up holding the bag, there’s even more incentive for these folks to hold onto their vehicles for longer. Though cynical, big oil firms like Chevron are among those contrarian stocks to buy for 2022.
DuPont de Nemours (DD)
Even with the fanfare that multiple stocks to buy experienced over the past two years, DuPont de Nemours has remained boring and pedestrian. In 2021, DD stock returned just a hair under 15%. Though believe me, you never want to scoff at positive returns because sometimes, the market isn’t always kind to you.
Still, when the vanilla SPDR S&P 500 ETF Trust (NYSEARCA:SPY) delivers nearly 29% for the year just ended, it makes you rethink things. Plus, over the trailing five-year period, DD is actually down a bit over 1%. Again, this circumstance doesn’t exactly elicit confidence.
However, for a contrarian pick among large-cap stocks to buy, DD could fit the bill under the basic thesis that it’s due for a strong performance. Thankfully, it’s not just wishful thinking bolstering DuPont. Recently, the materials giant announced that it bought out Rogers Corporation in an “all-cash transaction that values Rogers at approximately $5.2 billion.”
Perhaps most significantly, “Rogers’ advanced electronic and elastomeric materials are used in applications for EV/HEV.” Additionally, through the acquisition, DuPont will have exposure to “automotive safety and radar systems, mobile devices, renewable energy, wireless infrastructure, energy-efficient motor drives, industrial equipment and more.”
Archer Daniels Midland (ADM)
Over the past several months, business media outlets focused on the problems associated with rising consumer prices.
Due to the fastest rate of inflation in 31 years, the Biden administration couldn’t celebrate important economic benchmarks, such as the falling unemployment rate. Labor statistics don’t always concern individual households. But everybody — including the rich — notices when their favorite items cost more than they used to.
On the other hand, the employment level is still conspicuously lower than it was pre-pandemic, although GDP is much higher than it was just prior to the global health crisis. When you combine higher productivity with a lower worker base, you have deflation. Adding to this point, you have money velocity, which has dipped to multidecade lows.
Therefore, it isn’t a given which way the economy will turn, inflation or deflation. That’s why every investor should at least consider including Archer Daniels Midland in their list of stocks to buy. As a food processing and commodities trading corporation, Archer Daniels represents a crucial component of society: you’ll die if you don’t eat.
For a less-dramatic thesis, ADM is a consumer necessity. Therefore, budget cuts will impact most other companies before it starts crimping Archer Daniels.
With multiple changes occurring over the trailing two years, it’s difficult to pick just one major theme. Sure, most media headlines have covered the Covid-19 pandemic for good reason. However, climate change has also been a much-heated (no pun intended) discussion, as is the rising realization of the global water crisis.
“According to the International Water Management Institute , agriculture, which accounts for about 70% of global water withdrawals, is constantly competing with domestic, industrial and environmental uses for a scarce water supply. In attempts to fix this ever growing problem, many have tried to form more effective methods of water management,” states The Water Project.
While no one company can be the be-all, end-all catalyst for the brewing problem, Xylem, a water technology provider, may offer a substantive answer with its efficient management system. For instance, Xylem provides water supply and irrigation solutions for the agricultural industry, along with wastewater handling.
On the commercial side, Xylem offers energy-efficient HVAC (heating, ventilation, air conditioning) and water/wastewater solutions, while also providing water-related services for residential areas. Again, with dwindling supplies of Earth’s most precious resource, XYL is on course to become one of the most important stocks to buy.
With my last two picks for stocks to buy for 2022, I’m going to entertain the speculative side of the picture. If that’s not for you, feel free to skip ahead to the more conservative ideas that my InvestorPlace colleagues may have.
But if you want to add a small fireworks show to your portfolio, Alarm.com might provide just that. In 2020, most people were concerned about hunkering down and staying safe amid a strange infectious virus. But in 2021, society became much more acclimated to the new normal.
Now, let me be absolutely clear before you fire off a misguided email: I do not condone any crime, violent or otherwise. However, we must be intellectually honest and realize that many crimes — particularly involving property and/or finances — feature a catalyst. Economic desperation may explain at least some of the recent purported crime waves.
Well, regular folks are often the victims of broader trends that drive this desperation. That’s why Alarm.com, with its specialty in artificial-intelligence-driven security solutions could see a rise in relevance.
After all, these property crimes seem only to be increasing in frequency, intensity and blatancy.
When Squarespace launched its initial public offering last year, it did so with much anticipation. According to Benzinga contributor Sarah Horvath, the “company’s unique processes have made it significantly easier for those with little technical knowledge to extend their businesses into the online sphere.”
Further, Horvath notes that “Squarespace’s ready-made templates and membership pricing make it an attractive option for both those who need design assistance without paying for a full-service graphic designer.” Combined with a powerful and popular brand, SQSP seemed to be one of the stocks to buy for 2021.
Alas, the results weren’t quite as expected. Against its first closing price (which before you start typing is different from its reference price), SQSP slipped over 32%. Disappointing fiscal results along with stiff competition hurt investor confidence. Still, if you’re the optimistic type, 2022 could bring about a different perspective.
Namely, with so many American workers having gotten a taste of the gig life, they may want to explore it as a viable career option. As well, much of the negativity has already been priced in, potentially facilitating upside over the new year.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.