In this article, we discuss 10 best performing non-energy stocks of 2022.
On Friday, September 16, Wall Street concluded another one of its abysmal weeks in months, as investors reacted to a weak earnings indication from FedEx regarding the global economy. The S&P 500 lost 0.72% and the Nasdaq Composite slid 0.90% to finish the week at 3,873.33 and 11,448.40 points, respectively. It was the worst week for both indices since June.
The mixed economic numbers, paired with high inflation and FedEx warnings, have given rise to the prospect of stagflation yet again. This phenomenon refers to low economic growth and consistently heightened inflation. Regardless of the market indicators, Goldman Sachs still believes that a “soft landing” is a possibility. Goldman’s Chris Hussey is of the view that the economy has not entered stagflation yet, despite the negative GDP numbers at the beginning of the year.
In September and beyond, the market participants will closely monitor the Fed’s efforts to control inflation, to determine whether it will be at the expense of the economy. The market is in a “show me mode” and investors demand proof of improving economic indicators rather than vague forecasts. They want to see prices reaching equilibrium.
In anticipation of the Federal Reserve’s 75 basis point interest rate hike next week, Wall Street analysts are confused about the near-term dynamics of the stock market. Some market experts are worried that the economy is already weak and persistent rate hikes will lead to an epic market decline. The market bears include billionaire Ray Dalio, who expects a 20% negative impact on equity prices if rates keep rising. Meanwhile, there are market bulls like Fundstrat founder Tom Lee, who thinks that inflation has already peaked and the S & P 500 will soar over 20% to new highs by year-end.
While energy is one of the best performing market sectors as of late, investors who want to diversify their holdings seek out non-energy market players such as Apple Inc. (NASDAQ:AAPL), Pfizer Inc. (NYSE:PFE), and The Coca-Cola Company (NYSE:KO).
Photo by Chris Liverani on Unsplash
Our Methodology
We selected the stocks that operate in non-energy sectors and have registered notable share price gains in 2022 as of September 16. We have mentioned the analyst ratings, latest financials, and the hedge fund sentiment as of Q2 2022 for the stocks as well.
The list of the best-performing non-energy stocks of 2022 is ranked according to the share price gains, from lowest to highest.
Best-Performing Non-Energy Stocks of 2022
10. Karuna Therapeutics, Inc. (NASDAQ:KRTX)
Number of Hedge Fund Holders: 37
YTD Share Price Gain as of September 16: 86.31%
Karuna Therapeutics, Inc. (NASDAQ:KRTX) is a Massachusetts-based clinical-stage biopharmaceutical company that develops transformative medicines for patients with psychiatric and neurological conditions. Karuna Therapeutics, Inc. is one of the best-performing non-energy stocks of 2022, with the shares gaining more than 86% year to date as of September 16.
On August 8, Karuna Therapeutics, Inc. stock climbed 52% in pre-market trading after the company announced that its late-stage trial for experimental schizophrenia therapy, KarXT, met the primary endpoint. The experimental therapy was well tolerated in terms of safety and Karuna Therapeutics, Inc. expects to disclose data from the additional analysis of the EMERGENT-2 trial at future medical events.
Stifel analyst Paul Matteis raised the price target on Karuna Therapeutics, Inc. on September 13 to $295 from $260 and maintained a Buy rating on the shares after surveying 28 physicians who treat roughly 3,700 schizophrenia patients. While acknowledging that “drugs often survey better than they sell,” the analyst said the feedback was greatly positive on KarXT. He sees prominent opportunity for several players and he has lifted his estimate for the total market for muscarinics in schizophrenia to about $4.3 billion from $3.5 billion.
According to Insider Monkey’s data, 37 hedge funds were bullish on Karuna Therapeutics, Inc. at the end of Q2 2022, compared to 28 funds in the earlier quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with 1.2 million shares worth $141.6 million.
In addition to Apple Inc., Pfizer Inc., and The Coca-Cola Company, Karuna Therapeutics, Inc. is on the radar of elite investors.
Here is what Miller Value Partners Opportunity Trust Fund has to say about Karuna Therapeutics, Inc. in its Q2 2022 investor letter:
“Karuna Therapeutics Inc. had a lot of volatility over the quarter but ended up largely flat. We’ve done well with the position since initiation. The company is still in the clinical stage but has a largely de-risked asset, KarXT, focused on schizophrenia, a treatment area that has not had a new innovative treatment in decades. The company has shown strong Phase II data with Phase III results expected within weeks and an NDA (new drug application) submission expected in 2023. Furthermore, the company is developing KarXT in Alzheimer’s disease psychosis, providing the potential for further upside, a patient population where the mechanism of action has historically demonstrated both cognitive and behavioral improvements. We think the large opportunity in the schizophrenia space alone justifies a price more than double where it is currently trading.”
9. Turquoise Hill Resources Ltd. (NYSE:TRQ)
Number of Hedge Fund Holders: 22
YTD Share Price Gain as of September 16: 88.33%
Turquoise Hill Resources Ltd. (NYSE:TRQ) is a Canadian mining company. The company explores for copper, gold, and silver deposits. It is a subsidiary of the Rio Tinto Group. The company reported a Q2 GAAP EPS of $0.41, beating estimates by $0.09. The revenue of $402 million climbed 22% year-over-year and outperformed Wall Street consensus by $1.4 million. The stock has gained more than 88% year to date as of September 16, which merits its inclusion in our list of the best-performing non-energy stocks of 2022.
TD Securities analyst Craig Hutchison on August 25 raised the price target on Turquoise Hill Resources Ltd. to C$40 from C$34 and maintained a Hold rating on the shares.
According to Insider Monkey’s data, 22 hedge funds were long Turquoise Hill Resources Ltd. at the end of the second quarter of 2022, compared to 21 funds in the last quarter. Matthew Halbower’s Pentwater Capital Management is the biggest position holder in the company, with 19.5 million shares worth over $521 million. On September 16, Pentwater paid C$41 per share for 2.5 million additional shares of Turquoise Hill Resources Ltd., for a total price of C$102.5 million. Pentwater is a significant stakeholder in the company, and said it plans to vote against Turquoise Hill Resources Ltd.’s sale to Rio Tinto.
Here is what Massif Capital has to say about Turquoise Hill Resources Ltd. in its Q4 2020 investor letter:
“Turquoise Hill remains a challenging company to evaluate and a problematic company to manage within our portfolio. The company holds rights to a world-class asset, but one with very different characteristics than Ivanhoe’s Kamoa Kakula. Kamoa is a flat, low depth, high-grade block of copper ore that is relatively easy to mine. Turquoise Hill’s OT mine is a deep underground mine with good grades and high tonnage, but it is very challenging to monetize. The planned extraction method, block cave mining, is still a relatively new approach to mining an asset in the grand scheme of things. The scale of the OT mine exacerbates the challenge. Management challenges compound technical risks. Rio-Tinto (the mine operator and developer via a 51% stake in Turquoise Hill) and Turquoise Hill seem to always be at odds with each other, and both parties seem to always be at odds with the Mongolian Government.
Although we have spent significant time underwriting the technical, managerial, and political risks associated with the investment, we are continuously surprised by how frequently issues occur for this company. With that in mind, we constructed a collar on the position during the fourth quarter, selling call options for January 2022 at a $20 strike and using the proceeds to buy January 2022 puts on the position at a $7 strike. This will allow us to confidently hold the position in the near term, knowing we have locked in a gain of at least 50% from our purchase price while still allowing for significant potential price appreciation from the current $12 price.”
8. Ventyx Biosciences, Inc. (NASDAQ:VTYX)
Number of Hedge Fund Holders: 17
YTD Share Price Gain as of September 16: 88.92%
Ventyx Biosciences, Inc. (NASDAQ:VTYX) is a California-based clinical-stage biopharmaceutical company that creates small molecule product candidates for inflammatory diseases and autoimmune disorders. On September 12, Ventyx Biosciences, Inc. stock surged about 69% after Bristol-Myers Squibb’s TYK2 inhibitor Sotyktu (deucravacitinib) for plaque psoriasis was approved in the U.S. without a black-box warning. Year to date, the stock has climbed 89% as of September 16, making it one of the best performing non-energy market players in 2022.
H.C. Wainwright Analyst Emily Bodnar on September 12 said that the Sotyktu approval with no black-box warning was ‘a best-case scenario’ for the TYK2 category of drugs, and believes it is an optimistic catalyst for Ventyx’s VTX958. She raised the price target on the stock to $50 from $36 and maintained a Buy rating on Ventyx Biosciences, Inc.. The analyst believes VTX958 could generate $5 billion in sales in psoriasis and psoriatic arthritis and views Crohn’s disease as upside.
Among the hedge funds tracked by Insider Monkey, 17 funds were bullish on Ventyx Biosciences, Inc. at the end of June 2022, compared to 16 funds in the earlier quarter. Dan Loeb’s Third Point is the biggest stakeholder of the company, with 4.3 million shares worth $52.7 million.
7. H&R Block, Inc. (NYSE:HRB)
Number of Hedge Fund Holders: 27
YTD Share Price Gain as of September 16: 95.74%
H&R Block, Inc. was founded in 1955 and is headquartered in Kansas City, Missouri. The company provides assisted income tax return preparation and do-it-yourself tax return preparation services and products in the United States, Canada, and Australia. H&R Block, Inc. stock has skyrocketed about 96% year to date as of September 16.
H&R Block, Inc. on August 9 declared a $0.29 per share quarterly dividend, a 7.4% increase from its prior dividend of $0.27. The dividend is payable on October 3, to shareholders of record on September 8. The stock delivers a dividend yield of 2.58% as of September 16.
On August 10, Barrington analyst Alexander Paris raised the price target on H&R Block, Inc. to $48 from $40 and maintained an Outperform rating on the shares after the company posted FQ4 results ahead of expectations and disclosed initial FY23 guidance that beat Wall Street consensus. H&R Block, Inc. also announced a new share repurchase program of $1.25 billion and a 7% increase to the quarterly dividend. The analyst noted that this is the company’s sixth dividend increase in seven years.
Among the hedge funds tracked by Insider Monkey, H&R Block, Inc. was part of 27 hedge fund portfolios at the end of June 2022, compared to 25 funds in the preceding quarter. Jim Simons’ Renaissance Technologies is the biggest stakeholder of the company, with 1.3 million shares valued at $47.4 million.
Here is what Miller Value Partners Income Strategy has to say about H&R Block, Inc. in its Q2 2022 investor letter:
“H&R Block was the top contributor for the quarter, gaining 36.0%. H&R Block reported 3Q22 revenue of $2.1 billion, +3.9% year-over-year (Y/Y), ahead of consensus of $1.9 billion, and Adjusted Earnings Per Share (EPS) of $4.11, unchanged from 3Q21 EPS, ahead of analyst expectations for EPS of $3.75. The company repurchased 10 million shares for $226 million in the quarter, bringing total fiscal-year 2022 (FY22) share repurchases to $550 million, representing 13% of the company’s shares outstanding. Management also increased its FY22 guidance for revenue of $3.38-3.43 billion, up 3.0% from prior guidance of $3.25-3.35 billion at the midpoint, and EBITDA of $850-875 million (Enterprise Value (EV)/EBITDA of ~8.4x), up 9.2% from prior guidance of $765-815 million at the midpoint. H&R Block’s new mobile banking platform, Spruce, which launched in January, has shown encouraging progress so far, accumulating 150k customer signups and $60 million in customer deposits as of 4/30/22.”
6. Signify Health, Inc. (NYSE:SGFY)
Number of Hedge Fund Holders: 18
YTD Share Price Gain as of September 16: 105.60%
Signify Health, Inc. (NYSE:SGFY) is a Texas-based company that operates a healthcare platform, utilizing analytics, technology, and healthcare networks in the United States. The company operates through Home & Community Services and Episodes of Care Services segments. On September 2, Signify Health, Inc. stock climbed 7% given a report that CVS Health Corporation (NYSE:CVS) is in advanced discussions to acquire the former for about $8 billion. Signify Health, Inc. is one of the best performing non-energy plays in 2022, with the shares up more than 105% as of September 16.
Truist analyst Jailendra Singh on September 7 initiated coverage of Signify Health, Inc. with a Hold rating and a $30.50 price target. The company will benefit from solid Medicare Advantage growth and higher penetration within existing health plan clients, but given the impending deal with CVS Health, a Hold rating is justified, the analyst told investors in a research note.
According to Insider Monkey’s data, 18 hedge funds were long Signify Health, Inc. at the end of Q2 2022, compared to 26 funds in the earlier quarter. Cathie Wood’s ARK Investment Management is the leading position holder in the company, with 21.8 million shares worth $298.25 million.
Like Apple Inc., Pfizer Inc., and The Coca-Cola Company, Signify Health, Inc. is one of the stocks that investors are flocking to in the current market environment.
5. Alpha Metallurgical Resources, Inc. (NYSE:AMR)
Number of Hedge Fund Holders: 25
YTD Share Price Gain as of September 16: 122.6%
Alpha Metallurgical Resources, Inc. (NYSE:AMR) is a Tennessee-based mining company that produces and sells met and thermal coal in Virginia and West Virginia. On August 8, Alpha Metallurgical Resources, Inc. declared a $0.392 per share quarterly dividend, a 4.5% increase from its prior dividend of $0.375. The dividend is payable on October 3, to shareholders of record as of September 15. The stock registered a YTD share price gain of 122.6% on September 16, which merits its inclusion on our list of the best-performing non-energy stocks of 2022.
On September 15, Cowen analyst Lance Vitanza raised the price target on Alpha Metallurgical Resources, Inc. to $225 from $191 and reiterated an Outperform rating on the shares. The analyst said his target increase is due to an improved met coal price deck and observed that the discount between Alpha Metallurgical Resources, Inc. shares and their intrinsic value has risen significantly.
According to Insider Monkey’s data, Alpha Metallurgical Resources, Inc. was part of 25 hedge fund portfolios at the end of Q2 2022, compared to 30 funds in the last quarter. Jim Simons’ Renaissance Technologies is the leading stakeholder of the company, with 872,215 shares worth $112.6 million.
4. Global Blood Therapeutics, Inc. (NASDAQ:GBT)
Number of Hedge Fund Holders: 29
YTD Share Price Gain as of September 16: 131.60%
Global Blood Therapeutics, Inc. (NASDAQ:GBT) is a California-based biopharmaceutical company that works on treatments for underserved patient communities with sickle cell disease. On August 8, Pfizer Inc. announced that it agreed to buy Global Blood Therapeutics, Inc., valuing the company at $5.4 billion, which translates to $68.50 per share in cash. Global Blood Therapeutics, Inc. stock has skyrocketed about 132% year to date as of September 16, making it one of the best-performing non-energy plays of 2022.
On August 9, Wells Fargo analyst Jim Birchenough downgraded Global Blood Therapeutics, Inc. to Equal Weight from Overweight with a price target of $68.50, up from $66. The analyst cited Pfizer’s announcement for the downgrade.
Among the hedge funds tracked by Insider Monkey, 29 hedge funds were bullish on Global Blood Therapeutics, Inc. at the end of Q2 2022, with combined stakes worth $720.3 million, compared to 28 funds in the prior quarter worth about $698 million. Julian Baker and Felix Baker’s Baker Bros. Advisors is the biggest position holder in the company, with 3.7 million shares worth $119.25 million.
3. Veru Inc. (NASDAQ:VERU)
Number of Hedge Fund Holders: 13
YTD Share Price Gain as of September 16: 157.40%
Veru Inc. (NASDAQ:VERU) is a Florida-based oncology biopharmaceutical company, focused on developing medication for the management of cancers. Oppenheimer analyst Leland Gershell said on September 8 that although sabizabulin being discussed at an FDA Advisory Committee meeting came as a surprise and extends the start of US sales to at least October, his conviction for Emergency Use Authorization remains unchanged. With increased market skepticism around sabizabulin’s short-term regulatory pressures, the stock has plunged 21% and the analyst recommends taking advantage of current levels. He has an Outperform rating and a price target of $36 on the shares, reiterating Veru Inc. as a top pick. The stock has soared more than 157% YTD as of September 16, making it one of the best-performing non-energy stocks of 2022.
According to the second quarter database of Insider Monkey, 13 hedge funds were long Veru Inc. with combined stakes worth $200.8 million, compared to 9 funds in the last quarter worth $26.2 million. Peter Kolchinsky’s RA Capital Management is the largest shareholder of the company, with 7.90 million shares valued at $89 million.
2. Lantheus Holdings, Inc. (NASDAQ:LNTH)
Number of Hedge Fund Holders: 39
YTD Share Price Gain as of September 16: 187.5%
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a Massachusetts-based company that manufactures and commercializes diagnostic and therapeutic products used in the diagnosis and treatment of heart, cancer, and other diseases worldwide. On August 4, the company posted a Q2 non-GAAP EPS of $0.89 and a revenue of $223.72 million, outperforming Street forecasts by $0.19 and $19.21 million, respectively. The revenue surged 121.4% on a year over year basis. Lantheus Holdings, Inc. stock has skyrocketed about 187.5% YTD as of September 16, making it one of the best-performing stocks of 2022.
The company reported that it has net cash from operating activities of $72.6 million for the second quarter 2022 and free cash flow was $68.3 million. Lantheus Holdings, Inc. also raised its full year guidance for 2022.
According to Insider Monkey’s data, 39 hedge funds were long Lantheus Holdings, Inc. at the end of the second quarter of 2022, compared to 35 funds in the prior quarter. Israel Englander’s Millennium Management is the biggest position holder in the company, with 1.8 million shares worth $120.3 million.
Here is what Clearbridge Investments Small Cap Strategy has to say about Lantheus Holdings, Inc. in its Q1 2022 investor letter:
“While companies with immature business models and no profits exist throughout the market, there are certain sectors where they congregate more easily, such as health care. As access to cheap capital recedes, however, many of these specialty drug and biotech companies will likely find it challenging to dismiss long periods of unprofitability. While we have had limited exposure in the sector, our focus on finding high-quality companies at attractive valuations has yielded positive results. For example, Lantheus Holdings is a global leader in medical diagnostic imaging whose core business suffered during the COVID-19 pandemic due to a dramatic decline in hospital visits. As hospitals return to a level of normalcy, Lantheus’s core business has rebounded. Additionally, in late 2021 the company received approval for its new radio-pharmacological drug, Pylarify, for the treatment of prostate cancer, and initial sales have been well ahead of expectations. We believe it has a strong future in oncology diagnosis and treatment. As a result, Lantheus was our strongest individual performer for the first quarter.”
1. Belite Bio, Inc (NASDAQ:BLTE)
Number of Hedge Fund Holders: 1
YTD Share Price Gain as of September 16: 266.48%
Belite Bio, Inc (NASDAQ:BLTE) is a California-based clinical-stage biopharmaceutical drug development company that specializes in treatments for atrophic age-related macular degeneration and autosomal recessive stargardt diseases. The stock has gained more than 266% year to date as of September 16, making it one of the best-performing non-energy stocks of 2022.
On September 16, Belite Bio, Inc announced that it had received approval from the National Medical Products Administration of China to start the Phase 3 trial of its drug, LBS-008, in adolescents with a rare type of eye disease called Stargardt disease STGD1. To evaluate the safety and efficiency of LBS-008 in adolescent subjects, Phase 3 trials had begun already in the United States, the United Kingdom, Germany, Belgium, Switzerland, Hong Kong, Taiwan, and Australia, with multiple patients already enrolled.
H.C. Wainwright analyst Yi Chen on August 1 initiated coverage of Belite Bio, Inc with a Buy rating and a $58 price target. The analyst noted the company has a unique approach for a rare juvenile-onset retinal disorder.
You can also take a look at 12 Best Medical Device Stocks To Buy Now and 10 Best Media Stocks To Buy.
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