Top 5 Growth Investing Stocks For 2022

In 2021, the market had a great year, building on the robust recovery from the COVID-19 market bottom in 2020. Despite this, by the end of the year, several high-growth equities had experienced significant value compression. The adjustment, on the other hand, does not bother us. Following a great run that began in April 2020, such a substantial correction has allowed high-growth stocks to take a rest. It would allow these equities to consolidate, allowing market makers to quietly re-accumulate before later driving them upward.

When it comes to growth investing, we want to take a balanced approach. Some investors have focused solely on high-growth firms, with little regard for “big-tech” stocks. These equities, on the other hand, we believe, are crucial in reducing overall portfolio volatility. They also have an obvious long-term upswing, thanks to their highly competitive moat and solid underlying drivers. As a result, we suggest that long-term growth investors should carefully allocate their portfolio to a healthy mix of high-growth and big-tech businesses.

Here is a list of the top 10 picks for 2022.

Amazon

In 2021, Amazon (AMZN) stock was a laggard, underperforming the market. However, now that 2021 has passed, we believe that CEO Andy Jassy and his team are aiming to re-calibrate its e-commerce drivers since the firm has moved on from the difficult comparisons of 2020. Advertising, on the other hand, will continue to be an intriguing driver. AMZN is expected to gain significant market share over the next three years as a result of the walled gardens tripoli. Furthermore, Apple’s (NASDAQ: AAPL) IDFA modifications have no impact on its marketplace advertising business.

Furthermore, Amazon Web Services (AWS) continues to drive the company’s profitability. The stock has an EV/NTM EBITDA ratio of just 22.7x (3Y mean 22.7x). Our fair value estimations indicate that the stock is currently undervalued.

Apple

Throughout the year, Apple stock trailed the overall market until early December, when it overtook it and held it until the end of 2021. We’ve always believed that Apple’s stock has a clear long-term rising bias. Apple’s bearish investors will never grasp how the company’s stock can maintain its tremendous upward velocity. In CQ4’22, Apple is expected to introduce their AR/VR device. It’s reasonable to say that Apple has always generated a lot of buzz around its product releases, which has always been matched by flawless execution. Its AR/VR device will most likely be its point of entry into the metaverse. We believe that Apple CEO Tim Cook and his team have a metaverse strategy in place. Its installed base of over 1 billion satisfied iOS users is a significant asset. App Store revenue is expected to expand at a 20.7 percent compound annual growth rate (CAGR) over the next five years, according to Sensor Tower forecasts. Apple’s growth narrative is fueled by a slew of secular factors.

Alphabet

Alphabet (GOOGL) (GOOG) handily outperformed its big-tech counterparts in 2021, finishing the year with a 65.3 percent return. The stock enjoyed an incredible run that was never threatened during the year, as it led from beginning to end. Its search advertising division remains the most powerful participant in the digital advertising sector in the United States. Even though its market share is likely to decline over time, it is expected to maintain its dominant position in the next years. In addition, YouTube’s hold on the ad-supported video-on-demand (AVOD) industry has grown.

Furthermore, Google Cloud, led by CEO Thomas Kurian, is beefing up its software skills to compete with Amazon Web Services and Microsoft Azure (MSFT). Furthermore, our internal fair value evaluations show that the stock is undervalued. At 15.7x NTM EBITDA, it’s nothing near its highest valuation. As a result, we anticipate GOOGL will be among the top performers in 2022.

Meta Platforms

Since its name change in October, Meta Platforms’ (FB) potential in the metaverse has been questioned. In prior writings on Facebook, we have also addressed its metaverse theory in greater depth (See here, here, and here). Due to its very profitable business model, it’s safe to conclude that Facebook will be one of the most important metaverse stocks during the next decade. It will continue to fuel its metaverse ambitions and capital expenditures, which few can or are willing to match. Despite the challenges posed by Apple’s new App Tracking Transparency architecture, the company has been working hard to overcome them. Furthermore, advertisers continue to flock to Instagram, which recently surpassed 2 billion monthly active users (MAU). According to our fair value estimations, FB is similarly undervalued, as it trades at only 13.7x EBITDA.

Tesla

Elon Musk and his team have had another year to rejoice. Following a remarkable return of 696 percent in 2020, Tesla (TSLA) shares closed in 2021 with an astounding 49.8 percent. Given the firm’s EV/NTM EBITDA ratio of 69.6x, it’s clear that the stock isn’t cheap. Nonetheless, as Tesla exerts its leadership hold in the EV industry, its price has never actually gotten in the way. In 2021, its annualized run rate surpassed 1 million vehicles, and in 2022, it is expected to surpass 2 million (according to Wedbush). Furthermore, 1.3 million to 1.4 million units are estimated to be delivered in 2022, according to mainstream forecasts. Tesla can now focus Giga Shanghai’s 700K run rate on China’s demand, with Giga Berlin going up soon after and Giga Austin slated to follow. Tesla’s automotive gross margins are likely to be impacted by the early ramp of its new facilities. However, we feel that Tesla’s software engineering competence and excellent platform re-use have demonstrated its EV production capability. We feel that TSLA stock will continue to defy naysayers if there is one stock that can push EV leadership to new heights in 2022.