The 22 Best Stocks to Buy for 2022
The lesson of the past two years: Be ready for anything. Our 22 best stocks to buy for 2022 reflect several possible outcomes for what is turning out to be another volatile year.
As experts considered the best stocks to buy for 2022, they surely were looking over their shoulders. Unforeseeable events have recently made a mockery of strategists' carefully considered forecasts. COVID in 2020 and supply-chain chaos in 2021 are but two of the latest reminders of that fact of investing life.
On the one hand, the consensus view entering 2022 was for the global economic recovery to accelerate through this year. That naturally prompted plenty of strategists to pluck their top stock picks from cyclical sectors and recovery-sensitive industries.
On the other hand, economic forecasts are hardly gospel – and the first five months of 2022 put truth behind that saying.
After making new record highs in early January, the S&P 500 went on to suffer one of the worst starts to a year in history in 2022. Speculation that Russia was preparing to invade Ukraine turned into a full-scale attack by late February, sending broader markets tumbling and commodity stocks soaring – all while lighting a fire under already sizzling levels of inflation. To slow the rate of price increases, the Federal Reserve has launched an aggressive tightening campaign.
Further stoking the volatility are China's efforts to combat surging COVID-19 cases through widespread lockdowns, raising fears of slower crude demand and creating more uncertainty around already tight supply chains.
While many economists lowered their gross domestic product (GDP) outlooks in reaction to these macro factors, there are glimmers of hope. Kiplinger economists believe inflation likely peaked in March and will begin to ease soon, though still ending the year at a lofty 6.3%. Plus, many pandemic-weary Americans appear ready to open their wallets and hit the road this summer – good news for both travel shares and hotel stocks.
When it came to picking the best stocks to buy for 2022, the experts were bullish ... but also realistic. After all, stocks – even the best of them – never go up in a straight line.
"Historically, a difficult start hasn't necessarily foretold an ugly outcome to the year," says Tony DeSpirito, CIO of BlackRock's U.S. Fundamental Active Equities. "We see both a short- and longer-term opportunity taking shape." And the elevated uncertainty and volatility facing markets "highlights the importance of building resilience into portfolios. We believe this is best achieved through diversification and a focus on quality – particularly stocks of companies with strong balance sheets and healthy free cash flow characteristics."
We at Kiplinger believe the most prudent approach is to plan for a range of outcomes. So, with that in mind, here are the 22 best stocks to buy for 2022. Several of these top stocks are set to outperform amid a continued or accelerating economic recovery both at home and abroad. Others are more defensively positioned – built to grow should we enjoy smoother waters going forward in 2022, but also able to withstand additional macro-related disruptions. Other picks are contrarian plays; that is, names that were pummeled in either in 2021 or at the start of 2022 but could see a big return to favor in the months.
Data is as of May 18. Stocks listed in reverse order of yield. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
- Industry: Entertainment
- Market value: $190.0 billion
- Dividend yield: N/A
If there were ever a company that has proven its ability to adapt in a hurry, it would be Walt Disney (DIS, $104.30). The pandemic easily could have been Disney's undoing. Its theme parks were closed or had limited capacity for months. Its movie business was dead on arrival. And even its ESPN sports programming business was upended by the canceling or curtailment of most professional sports for months.
And yet, "the old saying that 'luck favors the prepared' can be applied to Disney's November 2019 launch of the Disney+ video service," says Argus Research analyst Joseph Bonner, who rates DIS shares at Buy. Suddenly, tens of millions of bored, homebound people had the itch (and the time) to stream hours of Disney, Marvel and Star Wars content.
Disney+ was an instant hit and absolutely crushed expectations, sending Disney's shares sharply higher in 2020. However, DIS shares came back down to earth in 2022 and are off about 44% from their 52-week highs.
But here's the thing: Nothing has changed. Disney+ is still emerging as the strongest competitor to Netflix (NFLX) and boasts a truly unrivaled catalog of content it's assembled over the decades. Disney's movie business is back, as evidenced by the flurry of Marvel superhero movies planned. And the theme parks … did you really think they'd stay down long?
At today's prices, the communication stock trades at a discount to where it did immediately before the pandemic struck. But Disney's empire has only grown since then. That, and a share-price lull in recent months, has DIS poised to be one of the best stocks to buy for 2022.
- Industry: Application software
- Market value: $46.1 billion
- Dividend yield: N/A
The Uber Technologies (UBER, $22.46) ride-sharing platform operates in 63 countries and 750 markets, connecting riders with drivers. Uber Eats triangulates customers, restaurants and drivers. The company also has an emerging freight business.
Uber reached an important milestone in the third quarter of 2021, turning a profit (before interest, taxes, depreciation and amortization expenses) for the first time.
The company that pioneered "mobility as a service" is a top internet stock pick at BofA Global Research, especially as urban centers reopen post-pandemic.
Even though earnings per share remain likely to be negative in 2022, BofA analysts, citing the company's improved financial position, an increasing supply of drivers and market share gains, put a Buy rating on the stock. They also say the stock could trade at $53 over the next 12 months – more than double its current price. That very likely would be enough to put it among 2022's best stocks.
- Industry: Medical care facilities
- Market value: $5.1 billion
- Dividend yield: N/A
A few months ago, Kiplinger's Personal Finance columnist James A. Glassman recommended AB Small Cap Growth (QUASX): a fund that has notched a sensational 29.8% annualized return over the past five years.
Now, he's tapping QUASX for one of his best stocks to buy for 2022.
AB Small Cap Growth has been adding to holdings of Louisiana-based LHC Group (LHCG, $165.79), a provider of post-acute care, including home health and hospice services, in more than 700 locations.
As the population ages, healthcare is a growth industry. And the stock started the year well priced after setbacks from hurricanes and because healthcare workers were forced to quarantine due to COVID-19.
Ultimately, LHC Group was a solid bet ... albeit one that investors likely can't squeeze for any more gains now. That's because UnitedHealth Group (UNH) announced in late March that it would buy the company for $5.4 billion in a deal expected to close later this year. As a result, LHCG stock should effectively be locked into a 20%-plus 2022 return until its shares are taken off the market.
- Industry: Internet content and information
- Market value: $7.1 billion
- Dividend yield: N/A
IAC/InterActiveCorp's (IAC, $79.28) business is acquiring other businesses, improving their online operations, then spinning them off. Dating website Match.com and the video-sharing platform Vimeo are two recent rehab projects. The strategy generates huge amounts of cash intermittently, which the company pours into new ventures, but earnings can be lumpy.
IAC's late-October agreement to buy Meredith, the publishing company, might provide steadier recurring revenues as soon as 2022. "That's a cash cow," says David Marcus of Evermore Global Advisors.
InterActiveCorp's shares are down about 37% over the past six months. But Marcus still sees value because he says the sum of the parts is worth more than the current price of IAC stock.
- Industry: Information technology services
- Market value: $7.1 billion
- Dividend yield: N/A
Dan Abramowitz, of Hillson Financial Management in Rockville, Maryland, is Glassman's go-to expert in smaller companies.
His choice for 2021 was IEC Electronics, which was purchased by Creation Technologies in October for 53% more than the stock's price when Glassman put it on the list, noting, "IEC is also a potential takeover target."
For the best stocks to buy for 2022, Dan recommends DXC Technology (DXC, $29.14): a midsize information technology company based in the suburbs of Washington, D.C.
It is in the midst of a turnaround, Dan writes, "yet we are still in the early innings here."
- Industry: Internet retail
- Market value: $234.7 billion
- Dividend yield: N/A
A Chinese crackdown on big tech companies has weighed on shares of this e-commerce giant. China slapped a record $2.75 billion fine on Alibaba Group (BABA, $87.31) after an anti-monopoly probe last spring. All told, shares lost more than 60% between their October 2020 peak and the end of 2021.
Some analysts, even bullish ones, have trimmed sales and earnings expectations given sluggish economic and e-commerce conditions in China.
That said, GoodHaven Capital Management portfolio manager Larry Pitkowsky, who likes a bargain with good growth prospects, bought shares in 2021 with expectations that BABA might be among the best stocks to buy for 2022.
Alibaba is the leading e-commerce company in China. Growth going forward might be less robust, but shares are cheap and trade at 11.2 times earnings estimates for 2022 – a steep discount to its five-term average forward price-earnings ratio of 25.1.
- Industry: Electronic components
- Market value: $6.5 billion
- Dividend yield: 0.8%
The more technology pervades our life, the more Littelfuse (LFUS, $262.68) stands to gain. The firm designs and makes fuses and circuits – small but necessary components – for consumer electronics, cars and industrial equipment.
Cars these days come with heated seats, power steering, lane change assistance and a heated steering wheel, among an increasing list of other things. Each feature requires its own fuse and circuit. Plus, Littelfuse dominates both the electronics and auto markets.
The stock is off 16% in 2022, but Robert W. Baird Equity Research analyst Luke Junk still sees upside for shares, especially when auto production returns to normal and supply-chain bottlenecks clear.
"We see outperformance based on a mix of cyclical, secular, and companyspecific positives, with the Electronics business well positioned on a secular basis, likely acceleration with supply chain easing in Transportation (plus EV tailwinds), longer-term opportunities in Industrial, and tailwinds from already-completed M&A," he says.
- Industry: Capital markets
- Market value: $120.0 billion
- Dividend yield: 1.3%
There's little in financial services that Charles Schwab (SCHW, $63.27) doesn't do. It's a brokerage firm, a money manager, corporate retirement plan administrator and a bank. And it has been gobbling up assets under management (AUM) with new accounts and acquisitions. Its TD Ameritrade acquisition pushed total AUM to $7.4 trillion.
Rising interest rates should be icing on the cake in 2022. Every 0.25-percentage-point improvement in rates means another $750 million to $950 million in earnings, or about 30 to 38 cents per share, says portfolio manager Andy Adams at Mairs & Power Growth Fund (MPGFX).
Wall Street analysts project that annual earnings will climb 19% in 2022, and even more next year.
- Industry: Medical distribution
- Market value: $31.7 billion
- Dividend yield: 1.2%
AmerisourceBergen (ABC, $151.11) distributes pharmaceutical products in the U.S. and internationally. Customers include retail and mail-order pharmacies, hospital networks, outpatient facilities, long-term care facilities and veterinarian practices.
Six of the 14 firms who cover the stock recommend it, with Argus Research being particularly bullish. Analyst David Toung says its recent acquisition of the Alliance Health distribution business in Europe and North Africa adds another growth driver.
"We note that ABC is a key distributor of COVID-19 therapeutics in the U.S., and is also distributing COVID vaccines in Canada," the analyst adds.
Although ABC shares trade above the average multiple for Argus's coverage universe of pharma distribution stocks, Toung believes "the premium is warranted based on the company’s strong growth opportunities and superior business execution."
Potential risks include drug-price regulation and opioid litigation.
- Industry: Copper mining
- Market value: $51.2 billion
- Dividend yield: 1.7%
Fidelity Advisor Growth Opportunities Fund (FAGAX) is red-hot, ranking in the top 3% of funds in its category for five-year returns as of the end of 2021. The problem is that it carries a whopping 1.82% expense ratio and is sold mostly through advisers.
Still, you can scan its portfolio for ideas.
Most of the fund's holdings are tech stocks, but the only new purchase for 2021 among its top 25 holdings was Freeport-McMoRan (FCX, $35.34), the minerals (copper, gold, silver) and oil and gas producer.
The stock climbed 61% in 2021, but is off by 11% in 2022. Helpfully, its P/E ratio, based on analysts' consensus projections for this year, is cheap, at less than 10.0. That, combined with an influx of Washington spending via the $1.2 trillion Infrastructure Investment and Jobs Act, could put FCX among the best stocks for 2022.
American Water Works
- Industry: Water utilities
- Market value: $26.2 billion
- Dividend yield: 1.8%
Founded in 1886, American Water Works (AWK, $144.28) is a water utility that sells water and wastewater services to residential, commercial, industrial and municipal customers.
Argus Research analyst John Staszak says he expects results to benefit from rate increases and from efforts to lower operating and maintenance costs as a percentage of revenues. Moreover, the company has significant opportunities to acquire smaller, less efficient utilities.
The utility stock is not cheap, selling at 32 times the Street's forward EPS estimate. However, "we think that a higher multiple is warranted given the company's skill as an acquirer, strong regulated businesses, and history of dividend increases," Staszak says.
This is a much more defensive pick than many of the other top stocks for 2022. However, the highest price target among covering analysts is $186, implying a potential 12-month total return of about 30%. That would be an outstanding year for any stock.
- Industry: Farm and heavy construction machinery
- Market value: $5.9 billion
- Dividend yield: 1.6%
There's infinite numbers of things we don't know yet about 2022. That's part of the appeal of a new year: that blank slate and thrill of the unknown.
But we do know this: Our government just passed into law one of the largest infrastructure bills of the past several decades. So, whatever happens in 2022, we can expect to see a lot of money flowing into infrastructure-related spending.
This should be a boon to Oshkosh (OSK, $90.20). Oshkosh builds specialty trucks like cement mixers, truck mounted cranes, "cherry pickers" and other hydraulic lifting systems. Any major expansion in infrastructure spending will mean demand for Oshkosh's products.
But apart from immediate infrastructure spending, Oshkosh is interesting for another significant reason. It's a leader in heavy-duty electric vehicles.
President Biden was forced to scale back some of his green ambitions in the infrastructure bill and the companion social spending bill. But renewable energy is still a major policy priority, and the Biden administration awarded a contract to Oshkosh to update the mail truck fleet in part with electric trucks.
If you believe in a greener future, Oshkosh is a good way to indirectly play it long term. And thanks to some froth coming off in the back half of 2021, OSK could be one of the best stocks to buy for 2022.
- Industry: Industrial real estate
- Market value: $88.5 billion
- Dividend yield: 2.6%
There are certain trends that were in place long before anyone had ever heard of COVID-19 and will be around long after the current omicron variant is a distant memory. The rise of e-commerce is one of them. Amazon.com (AMZN) and its brethren are taking over the world.
But knowing this, why shouldn't we profit from it as Amazon's landlord?
Lucky for us, we can. Prologis (PLD, $119.53), a real estate investment trust (REIT), is the industry leader in logistical real estate. It also happens to be a major landlord to Amazon and other e-tailers.
Internet shopping is sleek. It feels clean and modern. But none of those mouse clicks amount to anything without the underlying infrastructure to actually fulfill the orders. That's where Prologis steps in.
To put some real numbers to it, a shocking 2.5% of the world's GDP – or more than $2.2 trillion – already flows through Prologis properties. And as e-commerce continues to grow as a percentage of the total, it's a good bet that Prologis will grow right along with it. The company already owns nearly a billion square feet of space in properties spread across 19 countries with an occupancy rate of 96.6%.
Prologis is not just one of the best stocks to buy for 2022. It's one of the best stocks to buy and hold for the next 20 years. Shares yield 2.6%, which is much higher than the S&P 500. And PLD has more than doubled its payout since 2013.
- Industry: Industrial real estate
- Market value: $53.9 billion
- Dividend yield: 2.6%
The fund's third-largest holding is Public Storage (PSA, $306.90), owner of 2,500 facilities in 38 states, and Glassman likes it as one of his best stocks to buy in 2022.
"Is there a better business? Every year, I get an e-mail notice telling me my storage-unit rental has risen in price, and what am I going to do about it? Moving my stuff out is a horrifying thought," Glassman says. "I have always wanted to own this stock. It is expensive, but waiting might make it more so."
Bank of America
- Industry: Diversified banks
- Market value: $281.0 billion
- Dividend yield: 2.4%
The assets of Berkshire Hathaway (BRK.B), Warren Buffett's holding company, have become more and more diversified over the years. At last report, the company owned 47 publicly traded stocks.
Glassman says he is a longtime fan and shareholder of BofA as well. Financial stocks in general could be among the best stocks to buy for 2022 given rising interest rates. BAC, which trades at just 8.8 times next year's earnings, looks especially good.
- Industry: Pharmacy and healthcare plans
- Market value: $123.3 billion
- Dividend yield: 2.3%
Most Americans live within three miles of a CVS pharmacy. But CVS Health (CVS, $94.02) is more than a drugstore; it's an integral player in each link of the entire health chain.
"You get your jab at the pharmacy and while you're there, you might pop in the Minute Clinic for a minor ailment and buy Tootsie Rolls on your way out," says John Buckingham, editor of The Prudent Speculator.
Its Caremark division is a major drug distributor, and its healthcare benefits subsidiary Aetna serves 39 million people. Plus, this top stock for 2022 trades at less than 11 times expected earnings for the year ahead – a discount to its 10-year average forward P/E of 14.
- Industry: Restaurants
- Market value: $81.8 billion
- Dividend yield: 2.8%
Glassman’s contrarian bias paid off in 2021 when he shook off his disastrous 2019 choice of Diamond Offshore Drilling (it went bankrupt) and scored a double with Oneok (OKE).
Searching for value again, he has arrived at Starbucks (SBUX, $71.28), which took a big (and to his mind, unwarranted) hit over the summer when the company warned of a slower recovery in China.
Glassman is "taking advantage of skittish investors" and recommending Starbucks, one of the world's best-run companies, growing steadily with 33,000 outlets worldwide.
Crown Castle International
- Industry: Specialty real estate
- Market value: $76.0 billion
- Dividend yield: 3.4%
Let's ask a rhetorical question here: Do you see yourself using more mobile data, or less, in the years ahead?
You really don't need to answer that. We all know the answer. Unless you decide to go live off the grid, you're going to use more data.
That brings us to Crown Castle International (CCI, $175.46), a real estate investment trust specializing in cell towers. The REIT owns a network of more than 40,000 cell towers, more than 80,000 small cells (such as those used for 5G) and approximately 80,000 route miles of fiber cable. Crown Castle has a presence in every major U.S. market and has been in this basic line of work for more than 25 years.
2022 should see the continued growth in "smart everything": the smart home, the internet of things, autonomous driving and even the smart city. All of this requires data and the communications infrastructure to collect it and process it. And Crown Castle will be smack-dab in the middle of this trend.
At current prices, CCI yields 3.4%. And importantly, the REIT is a serial dividend raiser, having boosted its payout at a 9% compound annual rate since establishing it in 2014.
CCI could be among the best stocks for 2022 ... and much farther down the road. Barring the introduction of some new revolutionary technology that suddenly makes towers obsolete, it's hard to imagine any scenario in which Crown Castle doesn't enjoy a solid decade ahead.
T. Rowe Price
- Industry: Asset management
- Market value: $27.6 billion
- Dividend yield: 4.0%
The Value Line Investment Survey is a font of succinct research that has a strong forecasting record as well. One of Glassman's strategies is to pick from stocks that Value Line rates tops ("1") for both timeliness and safety. At the end of 2021, that list was short: nine companies, including obvious ones such as Apple (AAPL) and Visa (V).
The outlier is T. Rowe Price (TROW, $121.31), the Baltimore-based asset manager, whose earnings have risen each year since 2009 despite the growing popularity of low-cost index funds.
Value Line notes that "shares have staged a dramatic advance over the past year. However, our projections suggest … worthwhile appreciation potential for the next three to five years."
- Industry: Integrated oil and gas
- Market value: $330.2 billion
- Dividend yield: 3.4%
We might hope for a greener future. But good old-fashioned oil and gas is still what keeps the global economy moving.
Many of the growth and tech names that lead the bull market of the past decade look stretched. So investors scouting out the top stocks to buy for 2022 might look to more traditional value plays.
Energy supermajor Chevron (CVX, $168.06) fits the bill.
CVX trades for 10.1 times expected 2022 earnings and sports a dividend yield of 3.4%. That's remarkably cheap in a market that, by several measures, is the most expensive it has been since the bubble years of the late 1990s ... and for a stock that has ramped up by 44% in 2022 alone.
Energy stocks were unloved and under-owned. As recently as 10 years ago, the energy sector made up 13% of the S&P 500. Today, they make up about 2%. Some of this is due to green mandates to diversify away from oil and gas, though most is simply due to the fact that energy stocks have endured a truly miserable oversupplied market since late 2014.
All that reversed in the early stages of 2022, as Russia's invasion of Ukraine helped prices for global benchmark Brent crude oil to top $140 a barrel at one point in Q1. And who wouldn't want to own a shares of a true survivor trading at a discount amid elevated energy prices?
- Industry: Retail real estate
- Market value: $40.6 billion
- Dividend yield: 4.4%
After the breakneck tech- and growth-focused bull market of the past several years, we might be looking at a different kind of market in 2022.
Tiring of the volatility, investors may prefer the tortoise over the hare.
And that's where triple-net retail REIT Realty Income (O, $67.56) really stands to shine. Realty Income is a landlord specializing in high-traffic retail properties that are generally immune to competition from e-commerce. Its largest tenants are convenience stores, pharmacies and dollar stores, but it also has a healthy allocation to restaurants (approximately 8% of the portfolio), movie theaters (approximately 5%) and to health and fitness properties including gyms (approximately 6%).
Realty Income's stock price got beaten up during the pandemic, and the shares have yet to fully recover. But it's important to point out that the REIT's diversification and conservative business model allowed it to get through the pandemic without any real risk to its business. Realty Income actually managed to raise its dividend every single quarter of 2020 and 2021.
It's difficult to see anything but a worst-case scenario with omicron or another COVID variant having much of an impact here.
Realty Income has paid 622 consecutive monthly dividends and has raised its payout for 98 consecutive quarters as of this writing, and those numbers seem likely to only grow in the months ahead. On top of that, Realty Income yields more than 4% at current prices.
Come what may in 2022, Realty Income seems like a solid bet.
- Industry: Retail real estate
- Market value: $3.8 billion
- Dividend yield: 6.5%
The last of our 22 best stocks to buy for 2022 is the one with the highest dividend yield: EPR Properties (EPR, $550.94).
This REIT owns a diverse portfolio of properties centered around entertainment and experiences. Theme parks. Ski resorts. Even Topgolf driving ranges. And all of these businesses were booming before the pandemic knocked them of course.
But perhaps none of EPR's holdings took more abuse during the pandemic than its movie theaters, which currently make up about 44% of revenues. Theaters were closed for much of the pandemic, and to the extent they were open, there was nothing to watch. We only started seeing major releases in theaters again in recent months. And in fact, EPR has plans to reduce its exposure to this business in the years ahead.
In 2021, Americans relished doing all of the things they couldn't do in 2020. We're going to see a continuation of that theme in 2022, and EPR is very well placed to benefit. The shares still trade well before their pre-COVID levels and yield a fat 6%-plus.
If you see life getting increasingly back to normal in 2022, it makes sense to own EPR.
Charles Sizemore was long CCI, O and PLD as of this writing.