US stocks are on track for a successful year in 2021 with the three benchmark indices rising by more than 20%. Most of these gains are due to big-tech stocks like Microsoft, Apple, and Google.
Every year, Barron’s comes up with a list of top ten stocks they expect to do well in the following year. Last year’s picks included stocks like Royal Dutch Shell, Apple, Goldman Sachs, Merck, and Newmont. In total, those stocks have risen by about 26% this year. So, here are the top 3 stocks to buy in 2022 according to Barrons.
IBM (NYSE: IBM) has been a disappointing stock for many years. For example, while the S&P 500 index rose by more than 27% in 2021, the stock jumped by just 4%. It has dropped by more than 14% in the past five years.
Barron’s believes that IBM will do well in 2022 as the current CEO continues with his turnaround strategy. In 2022, he managed to spin off the technology business into Kyndryl, a company that is valued at more than $4 billion.
In its statement, Barron’s said that IBM was like “Microsoft jr”. As you recall, Microsoft was in a death spiral before Satya Nadella took over. Today, the firm has become the second-biggest company by market cap. Barron’s wrote this about IBM:
“If Krishna is successful in boosting sales and margins while making IBM relevant again, there could be a lot of upside in a largely forgotten stock.”
Hertz (NASDAQ: HTZ) went bankrupt in 2020 during the Covid-19 pandemic. The firm then resurrected in 2021 and became a popular company among retail traders. Today, the company has a market cap of more than $10 billion. The company even placed a big order for Tesla cars.
Hertz is now among the top stock picks by Barron’s. In its statement, Hertz said that the company was in great shape as the car rental industry booms because of the current car shortages. The analysts also cited its clean balance sheet and its partnership with Carvana. They also cited a statement by Jefferies that said:
“What once was a dysfunctional oligopoly with no pricing power is a functional oligopoly with pricing power.”
Nordstrom (NYSE: JWN) has been a disaster. The stock crashed by more than 27% in 2021 even as other stock jumped. This decline brought its total market cap at more than $3 billion. This is significantly lower than the $7 billion that the company turned down a few years ago. Barron’s expects that the stock will do well in 2022. They wrote:
“The company gets 40% of its sales online and has rationalized its physical footprint to about 100 full-service stores, while using small neighbourhood stores in urban areas for online pickups, returns, and alterations.”