Here Are the Best Stocks To Own as 2022 Draws to a Close
There are only a few trading days left in the year. What is the best thing to do? Check the market for opportunities. You can get some great deals. And you might find stocks with solid momentum heading into the new year.
By doing this, you’ll end the year on a high note – even if your portfolio’s performance is down. This is because you will know you have prepared well for the future. It’s okay if you don’t have an investment win every year. The most important thing is performance over the long term, so at least five years. Let’s take a look at the best stocks to own as 2022 draws to a close.
Amazon (AMZN 1.74%) is posting a 49% loss this year, and it’s trading at its lowest relative to sales since 2015. For investors, this is a huge buying opportunity.
If you look at Amazon’s earnings reports this year, you might wonder why I’m so optimistic. After all, the company reported quarter after quarter declines in operating income. And free cash flow shifted to an outflow.
The current economic environment is indeed hurting Amazon. But this is a temporary situation. And Amazon has the power to weather this storm. The company is even improving its cost structure, which could help it excel in the future.
But the real reason to kick Amazon right now is the company’s dominance in two high-growth markets: e-commerce and cloud computing. Amazon has grown its Prime subscription memberships to more than 200 million and increased investments in its cloud computing business, Amazon Web Services (AWS). These moves should help Amazon benefit once economic woes ease.
All of which means that today is the perfect time to get in on the Amazon story — and then sit back and wait.
2. Lululemon Athletica
Lululemon Athletica (LULU -0.44%) represents another bargain to grab before 2023. The maker of yoga-inspired gear is headed for a 19% decline. And the shares trade for 31 times expected earnings estimates — down from more than 48 earlier this year.
Lululemon has not been completely immune to economic pressures. The company’s adjusted operating margin fell 40 basis points in the most recent quarter. But revenue and gross profit climbed into the double digits. Lululemon’s brand strength has helped it continue to sell its products to fans — and usually at regular prices, not discounts.
At the same time, Lululemon doesn’t stop here. The company launched a new growth plan to double revenue to $12.5 billion by 2026. Lululemon aims to get there by doubling men’s line and digital revenue and quadrupling international revenue. The retailer has already grown in these areas as part of a growth plan announced in 2019. And he achieved his goals early.
Lululemon has proven to deliver strong earnings in tough times and keep customers coming back. It is also shown to be able to deliver on growth plan promises. So there is reason to be optimistic about this stock today and over the long term.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -1.44%) outperformed the market this year — delivering double-digit share price performance. And for a very specific reason. Vertex may have a big new revenue driver around the corner.
The biotech company has submitted exa-cel, its candidate for blood disorders, to regulators in the United States, Europe and the United Kingdom. Exa-cel is a one time curative treatment. And these blood disorders have limited treatment options today. If approved, exa-cel could become a huge success.
At the same time, Vertex’s core cystic fibrosis (CF) business is going strong. It generates billion-dollar revenue and profit annually. And Vertex’s leadership in the area is far from over. The company’s biggest CF drug, Trikafta, has a lot of growth potential as several countries agree to reimbursements and regulators approve it for younger age groups. Vertex is also studying a new CF candidate that is currently in phase 3 trials.
The pipeline also looks promising. Vertex works on several programs, including pain management and type 1 diabetes. The pain management candidate is in phase 3 trials, so it could be another potential revenue driver in the not-too-distant future.
Even after this year’s earnings, Vertex trades at less than 20 times estimates, which seems very reasonable considering the company’s current product portfolio and future potential. Vertex is a great stock to own today – and for the long term.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon.com and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Amazon.com, Lululemon Athletica and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.