In this article, we discuss the 10 best stocks to buy before 2022. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Stocks to Buy Before 2022.
Global supply chain issues, labor shortages, and business technology investments dominated discussions around growth in 2021. According to an economic forecast by the Conference Board, a non-profit research group, consumer spending patterns are likely to normalize in 2022 and the supply disruptions are expected to improve as the pandemic recedes. The global economy is slated to grow at a rate of 3.9% in the upcoming year, with the United States and China leading the pack with growth rates of 3.8% and 5.5%, respectively.
The growth rates are higher than normal since 2022 is expected to be a breakthrough year for the economy as it slowly recovers from a torrid 2020. The International Monetary Fund expects the world economy to grow by 4.9% in 2022, driven by growth in advanced economies. The Economist Intelligence Unit sees global GDP expanding by 4.1% in 2022 after witnessing 5.4% growth in 2021. Overall, most analysts are bullish on an accelerating recovery.
Some of the top stocks to buy before 2022 include Thermo Fisher Scientific Inc. (NYSE:TMO), Airbnb, Inc. (NASDAQ:ABNB), and Coupa Software Incorporated (NASDAQ:COUP), among others discussed in detail below. Investors eager to pour money into these equities should also carefully consider risks like US-China tensions, cyber warfare, and widespread social unrest that could be likely disruptors to this growth.
Our Methodology
These were picked on upcoming growth catalysts, business fundamentals, and analyst ratings. Hedge fund sentiment was also included as a key classifier.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Best Stocks to Buy Before 2022
10. Sarcos Technology and Robotics Corporation (NASDAQ:STRC)
Number of Hedge Fund Holders: N/A
Sarcos Technology and Robotics Corporation (NASDAQ:STRC) markets robotics and microelectromechanical systems for military and industrial purposes. The firm, although small in size, already has a contract with the US Navy for the Guardian DX teleoperated dexterous robotic system. The US Navy recently exercised a contractual option to expand the testing and demonstration of the system. The technology is revolutionary since it performs human-like tasks in challenging conditions, even at height.
Jefferies analyst Stephen Volkmann initiated coverage of Sarcos Technology and Robotics Corporation (NASDAQ:STRC) stock on October 13 with a Buy rating and a price target of $16, highlighting the potential of the firm in developing robotics for non-standard settings. These robots could tackle problems like labor shortages and injuries, the analyst underlined.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Sarcos Technology and Robotics Corporation (NASDAQ:STRC) with 1.5 million shares worth more than $15 million.
Just like Thermo Fisher Scientific Inc. (NYSE:TMO), Airbnb, Inc. (NASDAQ:ABNB), and Coupa Software Incorporated (NASDAQ:COUP), Sarcos Technology and Robotics Corporation (NASDAQ:STRC) is one of the stocks on the radar of elite investors.
9. Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC)
Number of Hedge Fund Holders: 19
Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) is a Swedish firm that markets communications infrastructure. The company is one of the leading providers of 5G infrastructure. As the US government prepares for a massive communications infrastructure overhaul, Ericsson could be one of the biggest beneficiaries of future government contracts to improve 5G connectivity in the country, especially in the context of US skepticism towards Chinese companies in this regard.
On October 8, investment advisory Barclays maintained an Overweight rating on Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) stock and raised the price target to SEK150 from SEK145.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $228 million in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), the same as in the preceding quarter worth $317 million.
8. Akamai Technologies, Inc. (NASDAQ:AKAM)
Number of Hedge Fund Holders: 30
Akamai Technologies, Inc. (NASDAQ:AKAM) provides cloud services for content and business applications. Although it is one of many cloud firms that have promising growth prospects, the firm has recently started marketing a cloud security technology that has received a lot of good feedback from the market, setting it apart from peers. Earlier this month, in the third quarter earnings report, the company revealed that security technology sales had risen 26% year-on-year to $335 million against a total revenue of $860 million.
RBC Capital analyst Rishi Jaluria recently initiated coverage of Akamai Technologies, Inc. (NASDAQ:AKAM) stock with an Outperform rating and a price target of $140, citing the leadership position of the firm in the content delivery network and transition to a security-first ethos as some of the reasons behind the bullish outlook.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Akamai Technologies, Inc. (NASDAQ:AKAM) with 720,065 shares worth more than $83 million.
In its Q2 2021 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Akamai Technologies, Inc. (NASDAQ:AKAM) was one of them. Here is what the fund said:
“In the technology sector, we sold our position in Akamai (tkr: AKAM). Akamai has benefitted from higher internet traffic during the pandemic, but we expect the company to face difficult comparable earnings results in 2021 and growth expectations going forward remain low.”
7. Sabre Corporation (NASDAQ:SABR)
Number of Hedge Fund Holders: 37
Sabre Corporation (NASDAQ:SABR) provides technology solutions for the travel industry. Even though the travel economy has improved as vaccinations allow for the resumption of normal service in countries around the world, they are still a long way off from pre-pandemic levels. 2022 could be a key year for the travel industry as pent-up demand results in a mini-boom, some countries only opened international travel in time for the holiday season, and firms like Sabre could be leading beneficiaries of this.
Sabre Corporation (NASDAQ:SABR) is already preparing for the months ahead. It recently introduced the Retail Intelligence suite, a set of tools for dynamic pricing of airfare and ancillaries. This would help enterprise customers adapt to changing market conditions.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $972 million in Sabre Corporation (NASDAQ:SABR), down from 40 in the preceding quarter worth $1.2 billion.
6. Zscaler, Inc. (NASDAQ:ZS)
Number of Hedge Fund Holders: 38
Zscaler, Inc. (NASDAQ:ZS) is a cybersecurity firm based in California. The company provides solutions that let users, servers, and Internet of Things devices secure access to externally managed applications. Since internet-related businesses are booming, cybersecurity has emerged as a dominant theme within the industry, especially in the context of hacking and data privacy concerns. Zscaler looks set to benefit from increased enterprise spending on the sector in the next few years.
Zscaler, Inc. (NASDAQ:ZS) recently announced partnerships with Siemens and TD SYNNEX for security solutions and services. BTIG and KGI Securities are both bullish on the stock, with Buy and Outperform ratings, respectively.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Zscaler, Inc. (NASDAQ: ZS) with 1.4 million shares worth more than $318 million.
In addition to Thermo Fisher Scientific Inc. (NYSE:TMO), Airbnb, Inc. (NASDAQ:ABNB), and Coupa Software Incorporated (NASDAQ:COUP), Zscaler, Inc. (NASDAQ:ZS) is one of the stocks that hedge funds are buying.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Zscaler, Inc. (NASDAQ:ZS) was one of them. Here is what the fund said:
“We also exited our investment in Zscaler. Zscaler provides cloudbased Internet security solutions. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. Furthermore, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a remote workforce make operating IT infrastructures increasingly complex. Zscaler’s scalable, cloud-based security platform is a more secure and efficient way to connect users and applications, which eliminates the need for several layers of security (firewalls, VPNs, etc.) developed and built over the last couple of decades. While the pandemic crisis is likely disrupting some areas of Zscaler’s new sales funnel, the company is particularly well-suited to scale and accelerate our market share-gain thesis. Ninety percent of employees are remotely connecting to the enterprise IT network in today’s inverted world, as opposed to prior solutions which are geared to support 10%-20% of workers connecting remotely with the rest connecting from within the walls of a corporate network. Many employees have used traditional VPN connections to log into their networks remotely, but Zscaler’s platform offers a more secure connection without exposing an entire internal network, is easier to configure and is less costly to operate at scale. While the trend toward connecting remote devices over the Internet backbone remains firmly in motion, the stock appreciated over 300% in 2020, quickly outgrowing our small-cap market cap mandate, and we ended our successful campaign.”
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Disclosure. None. 10 Best Stocks to Buy Before 2022 is originally published on Insider Monkey.
