For today’s piece, I’m looking to find seven stocks to buy that doubled in 2021 and have a possibility of doing it again in 2022.
With the S&P 500 gaining 26.9% last year, it shouldn’t be quite as tricky as it usually is picking a needle out of the haystack. The last time I did this exercise was in 2020. I chose seven stocks that I thought could deliver a repeat performance from 2019.
How did my picks do? I won’t bother you with the details. I know that Shopify (NYSE:SHOP) managed to get the job done. And, except for StoneCo (NASDAQ:STNE) and Universal Display (NASDAQ:OLED), they’ve all performed reasonably well in the 24 months since.
It’s not easy picking repeat performers. It will be especially hard to choose stocks to buy this year because the markets aren’t expected to do nearly as well. Analysts expect the index to gain 9.6% in the year ahead, about one-third their return in 2021.
As I said, it won’t be easy. But here goes.
- Boot Barn Holdings (NYSE:BOOT)
- Lucid Group (NASDAQ:LCID)
- United Natural Foods (NYSE:UNFI)
- Cenovus Energy (NYSE:CVE)
- B. Riley Financial (NASDAQ:RILY)
- Builders FirstSource (NYSE:BLDR)
- Newmark Group (NASDAQ:NMRK)
Stocks to Buy: Boot Barn Holdings (BOOT)
The retail chain, which sells western and work-related footwear and apparel, gained 189% in 2021. So far in 2022, it’s gotten off to a bit of a slow start, down 9%.
Boot Barn got its start in 1978, went public in October 2014 – it sold five million shares at $16 a share – and today operates more than 265 stores in 36 states, generating $1.18 billion in revenue in the trailing 12 months ended Dec. 25.
In the company’s most recent quarterly results, it reported that its sales in Q3 2022 were $485.9 million, 71.1% higher than Q3 2020. Its same-store sales grew 61% over its sales in the third quarter of fiscal 2020. On the bottom line, it earned $2.23 a share in the latest quarter, 175% higher than Q3 2020.
Equally important, it finished the quarter with $115 million in cash and no debt on the balance sheet.
Twelve analysts cover BOOT’s stock. The average rating from analysts is “overweight” with a $144 median price target.
The retailer’s trailing 12-month free cash flow is $120 million, or 10.2% of its revenue. That’s not outrageously strong but it’s 3x what it was in fiscal 2019, so it’s definitely growing.
Unless Covid-19 really shuts things down, it will continue to grow its sales.
Lucid Group (LCID)
Lucid’s stock gained 287% in 2021. However, that accomplishment comes with an asterisk. Lucid merged with Churchill Capital Corp IV in July 2021, a special purpose acquisition company sponsored by financier Michael Klein. From July 26, LCID stock gained 60% in 2021.
I’d take either of those returns in a single calendar year.
Anyway, as most investors who follow the electric vehicle scene, the Lucid Air Dream Edition R version of its EV has a range of 520 miles, 100 more than its competitors. In addition, the vehicle charges much faster than its competition, making the base price of $170,500 an afterthought for the wealthy car enthusiast.
Although it’s already delivered some vehicles, the year ahead is when its deliveries really start to heat up. It’s at that point that a double could come into play.
However, this is not a stock for the risk-averse. The volatility in the year ahead will be significant. Remember, Lucid will lose a ton of money for the foreseeable future. It’s hard enough betting on companies that make money, let alone one that might take several years to dive into the black.
Furthermore, in my latest article about Lucid in early January, I suggested that it could hit $57 in 2022, the target price set by Citigroup analyst Itay Michaeli. So, I’m already on record stating I think it has enough gas in the tank (pun intended) to get to $57. To double in 2022, LCID must get to $77.50.
That’s a big ask, but an ask I think Lucid CEO Peter Rawlinson can deliver.
United Natural Foods (UNFI)
United Natural Foods is the largest publicly traded wholesale distributor of healthy food options to customers in the U.S. and Canada. Its stock gained 215% in 2021. As a result, the company’s three-year annualized total return has jumped up to 53.4%.
With the healthy food movement continuing its momentum into 2022, I see United Natural Foods finding plenty of new customers to buy the products it wholesales.
Interestingly, when the company acquired Supervalu in 2018, it said at the time that it planned to sell Cub Foods and Shoppers, two retail grocery store chains, but now it appears it plans to stay in the retail game. It seems owning a retail business isn’t nearly as bad a business proposition as the company once thought.
Barring a lucrative offer to buy the businesses, Cub Foods and Shoppers will be a part of UNFI for years to come.
United Natural Foods reported Q1 2022 results in early December. Sales were up 4.7% with adjusted earnings per share of 97 cents, 90.2% higher than a year earlier. In 2022, it expects adjusted EPS of $4.05 at the midpoint of its guidance.
Were its share price to double in 2022, that would still only be 22x earnings. It’s a long shot, but not impossible.
Stocks to Buy: Cenovus Energy (CVE)
The Energy Select Sector SPDR Fund (NYSEARCA:XLE) gained 53% in 2021, so it’s not surprising that Cenovus (NYSE:CVE), the Canadian integrated oil company best known for its oil sands assets, gained 103% in 2021.
I’ve never been a fan of the fossil fuel producers, but it was only a matter of time before energy prices moved higher and the company’s that produce oil and natural gas got their coffers refilled.
Through the nine months ended Sept. 30, Cenovus had TTM revenue of 37.63 billion CAD ($30.1 billion) and a normalized EPS of 1.11 CAD (89 cents). The company’s revenue in 2021 is considerably higher than it’s been over the past three years because of higher production and commodity prices.
It is for this reason that it initiated a share repurchase program that allows management to buy back up to 10% of its shares outstanding. It also doubled its quarterly dividend payment with the Q4 2021 payment.
This alone should attract many new investors to its shares in 2022. It might not be enough to deliver a double for shareholders in the year ahead, but it will reward those who’ve stuck with the company over the past two years.
As far as energy stocks go, Cenovus is a keeper on our list of stocks to buy.
B. Riley Financial (RILY)
The Los Angeles-based investment bank and financial advisory had a strong year in the markets, gaining 141% in 2021.
Current Co-CEO Bryant Riley launched B. Riley & Co. in 1997. The boutique research firm focused on small-cap stocks. In 2014, it merged with the Great American Group in 2014. That got its stock on to Nasdaq. Several acquisitions later, B. Riley Financial has more than 2,000 employees operating out of more than 200 offices across the U.S.
Revenues and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) have both grown consistently over the past four years.
On the top line, sales have grown 309% on a cumulative basis from $423 million in 2018 to $1.73 billion at the end of September 2021. Its adjusted EBITDA grew 883% over the same period.
As it states on Page 9 of its most recent presentation, shareholders achieved a 311% total return since January 2017. More importantly, the management and board own 28% of the company. Therefore, their interests are the same as other shareholders: Make money and grow the stock price.
While 2022 might be a tougher year to make money on Wall Street, it’s on our list of stocks to buy because it’s got a real shot at doubling its stock for a second straight year. Riley is one of the Fortune 100’s fastest-growing companies.
Builders FirstSource (BLDR)
In what was a transformative year, Builders FirstSource gained 106% in 2021. Not only did it deliver in 2021 for shareholders, but it’s also performed well over the past decade with an annualized total return of 42.7%.
It too is off to a slow start in 2022, down 6%. If it’s going to double this year, the poor start probably doesn’t mean anything. The important thing for the manufacturer and supplier of building products is that new house construction remains healthy as it’s been for several years.
One way for the company’s share price to double would be for it to go from being the hunter to the hunted. I recently put it on a list of 10 potential merger and acquisition candidates in 2022. I argued that it would be the perfect acquisition for Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).
Unfortunately, Warren Buffett doesn’t appear in a buying mood for either equities or private businesses. His loss, I guess.
After buying BMC Holdings at the beginning of 2021, the merged entity’s sales grew like weeds. As I said in my article, through the first nine months of fiscal 2021, the company’s sales were $15.3 billion, 83% higher on a pro forma basis. On the bottom line, earnings were $1.28 billion for an attractive 8.4% net margin.
BLDR could be the best bet of the seven names on my list of possibilities to double in 2022.
Stocks to Buy: Newmark Group (NMRK)
The commercial real estate advisory gained 154% in 2021. The company was spun off from BGC Partners (NASDAQ:BGCP) in November 2018.
Like most stocks, Newmark’s share price dipped dramatically in March 2020, getting as low as $2.87. It’s bounced back nicely in the three years since.
In early December, the real estate company held an investor and analyst event. There’s no question its business is on a roll. Revenues in Q3 2021 were up 80.8% to $788.1 million while adjusted earnings grew 304.5% year-over-year to $129.2 million, good for a 16.4% net margin.
Newmark has more than 6,200 professionals operating from more than 160 offices around the world, generating $2.5 billion in annual revenue.
Over the past decade, it’s gone from being a company that handled regional tenant leasing to being a multi-faceted real estate advisor. It did this through a combination of finding the right talent to buying the right businesses.
That’s not as easy as it sounds.
By 2025, it expects to generate $4.5 billion in revenue at the midpoint of its projections. That’s 13% compound annual growth between 2021 and 2025. It expects the same growth from its adjusted EBITDA.
It plans to invest almost $2 billion in its business over the next four years. That should translate into its stock price moving significantly higher, putting it on our list of stocks to buy. You might not see a double in 2022, but over the long haul, you ought to make money on Newmark.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.