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5 Must-Buy High-Flying Stocks With More Upside in 2022

We have narrowed our search to five large-cap stocks that have skyrocketed more than 60% in 2021 with more upside left for 2022. These are: CF, OXY, DVN, MRVL and...

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This story originally appeared on Zacks

We are approaching the end of 2021 with just nine days of trading left. Wall Street is likely to close a highly successful 2021 unless something drastic crops up in the last few days. After an astonishing 2020, the performance of U.S. stock markets is commendable as both years have been marred by the pandemic.

- Zacks

Several stocks have skyrocketed in 2021 with more room to grow next year. Investment in such stocks with a favorable Zacks Rank should be lucrative going forward. Here we have selected five stocks, namely, Blackstone Inc. BX, Devon Energy Corp. DVN, CF Industries Holdings Inc. CF, Occidental Petroleum Corp. OXY and Marvell Technology Inc. MRVL.

A Solid 2021 for Wall Street

Year to date, the major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 17.3%, 24.3% and 17.8%, respectively. In 2020, the Dow, the S&P 500 and the Nasdaq Composite — advanced 7.3%, 16.3% and 43.6%, respectively.

The Market rally in 2021 is more commendable as it is more broad-based. Last year’s performance was mainly technology sector based. This year, aside from technology, cyclical sectors like energy, financials, industrials, materials and consumer discretionary have gained impressively with the reopening of the economy.

Nationwide COVID-19 vaccination and faster-than-expected recovery of the U.S. economy have acted as the catalysts of 2021. On the other hand, this year has been negatively impacted by the highest inflation rate in four decades and shortage of skilled manpower. Inflation has skyrocketed in 2021 primarily due to the pandemic-led global breakdown of the supply-chain system. This year has also been affected by the resurgence of coronavirus in various variants.

Near-Term Positives

The fundamentals of the U.S. economy are robust. Both consumer spending and business spending remain strong despite mounting inflation and global supply-chain disruptions. Both manufacturing and services PMIs have remained elevated.

On Nov 15, President Joe Biden signed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.

The infrastructure development project will be a major catalyst for the U.S. stock markets in 2022. Various segments of the economy such as basic materials, industrials, utilities and telecommunications will benefit immensely with more job creation for the economy.

On Nov 19, the House of Representatives passed a massive $1.75 trillion social safety net and climate bill proposed by the Biden administration. The bill will now head toward the Senate.

Moreover, the White House has put pressure on Congress to quickly pass legislation providing $52 billion to help computer chip manufacturers and ease the shortage of components vital to many industries.

Our Top Picks

We have narrowed our search to five large-cap stocks (market capital > $10 billion) that have skyrocketed more than 60% in 2021 with more upside left for 2022. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performanc of our five picks year to date.

Zacks Investment ResearchImage Source: Zacks Investment Research

Devon Energy aims for strong oil production from the Delaware Basin holdings. Devon Energy’s presence in Delaware has expanded due to its all-stock merger deal with WPX Energy. DVN is using new technology in production process to lower expenses.

Devon Energy’s divestiture of Canadian and Barnett Shale gas assets will allow it to focus on its five high-quality oil-rich U.S. basins assets. DVN’s stable free cash flow generation allows it to pay dividend and buy back shares. Devon Energy has ample liquidity to meet near-term debt obligations.

Devon Energy has an expected earnings growth rate of 54.1% for next year. The Zacks Consensus Estimate for next-year earnings improved 1.7% over the last 30 days. The stock price of DVN has soared 155.3% year to date.

The Blackstone Group remains well-poised to benefit from its fund-raising ability, revenue mix and inorganic expansion strategies. To provide ESG-focused investment opportunities, BX inked a deal to acquire Sphera, while the buyout of DCI will further enhance its digital capabilities.

The Blackstone Group’s fee-earning AUM and total AUM consistently demonstrate strong growth, aided by increasing net inflows. Over the last four years (2017-2020), fee-earning AUM witnessed a CAGR of 11.9% and total AUM saw a CAGR of 12.5%. Both metrics witnessed an uptrend in the first nine months of 2021. BX’s diversified products, revenue mix and superior position in the alternative investments space will likely continue to support AUM growth.

The Blackstone Group has an expected earnings growth rate of 18.2% for next year. The Zacks Consensus Estimate for next-year earnings improved 15.4 % over the last 60 days. The stock price of BX has jumped 91.3% year to date.

Marvell Technology is benefiting from solid demand for its storage and networking chips from the 5G infrastructure and data-center end markets. Strong supply-chain executions are helping MRVL to address the strong demand from cloud datacenters for its Smart NICs and security adapters.

Moreover, the wireless infrastructure business of Marvel Technology is showing signs of improvements. The recent acquisition of Inphi is boosting the top line of MRVL. Further, the storage business is steadily recovering from the coronavirus impacts.

Marvel Technology has an expected earnings growth rate of 42.6% for next year (ending January 2023). The Zacks Consensus Estimate for next-year earnings improved 10.5% over the last 30 days. The stock price of MRVL has climbed 75.9% year to date.

CF Industries is well placed to benefit from higher nitrogen demand in major markets. Demand for nitrogen is expected to be strong in North America, driven by healthy corn acres in the United States. Lower domestic urea production is also likely to drive demand in Brazil.  

CF Industries is also seeing a rebound in industrial demand from the pandemic-led disruptions. CF will also likely gain from a recovery in nitrogen prices on the back of lower supply availability due to reduced operating rates across Europe and Asia. Higher nitrogen prices will lend support to CF’s bottom line.

CF Industries has an expected earnings growth rate of more than 100% for next year. The Zacks Consensus Estimate for next-year earnings improved 1% over the last 7 days. The stock price of CF has appreciated 66.2% year to date.

Occidental Petroleum continues to increase hydrocarbon production volumes from its high-quality asset holdings and lower outstanding debts through the proceeds from non-core assets sale. The acquisition of Anadarko, investment to strengthen infrastructure and its Permian Basin exposure continue to boost the performance of OXY.

Occidental Petroleum has achieved the $10-billion divestiture goal through non-core assets sale. Its cost-management initiatives will boost margins going forward. OXY is also working to lower emission and aims for net-zero emissions by 2050.

Occidental Petroleum has an expected earnings growth rate of 41.3% for the current year. The Zacks Consensus Estimate for current-year earnings improved 35.7% over the last 7 days. The stock price of OXY has surged 64% year to date.



Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. 

See 3 crypto-related stocks now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Blackstone Inc. (BX): Free Stock Analysis Report

 

Devon Energy Corporation (DVN): Free Stock Analysis Report

 

Occidental Petroleum Corporation (OXY): Free Stock Analysis Report

 

CF Industries Holdings, Inc. (CF): Free Stock Analysis Report

 

Marvell Technology, Inc. (MRVL): Free Stock Analysis Report

 

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Zacks Investment Research