The 6 best stocks to buy for 2022: Insure your future

The main lesson of past years: Be ready for anything. Our 6 best stocks to buy for 2022 reflect several possible outcomes for what is turning out to be another volatile year.

1. Walt Disney

  • Industry: Entertainment
  • Market value: $238.2 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, $130.84). 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 2021 and are off about 31% 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?

«We expect EPS to double in FY22 as the company recovers from the pandemic, with more normal though still strong 17% growth in FY23,» Bonner says.

At today’s prices, the communication stock trades at a slight 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.

2. Uber Technologies

  • Industry: Application software
  • Market value: $62.5 billion
  • Dividend yield: N/A

The Uber Technologies (UBER, $31.99) 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 the stock could trade at $55 over the next 12 months – a 72% gain from current prices. That very likely would be enough to put it among 2022’s best stocks.

3. LHC Group

  • 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, $167.35), 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.

4. IAC/InterActiveCorp

  • Industry: Internet content and information
  • Market value: $9.0 billion
  • Dividend yield: N/A

IAC/InterActiveCorp’s (IAC, $99.72) business is acquiring other businesses, improving their online operations, then spinning them off. Dating website 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 30% 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.

5. DXC Technology

  • Industry: Information technology services
  • Market value: $7.5 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, $30.70): 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.» Profits are improving, but the tech stock «is valued at under 10 times current fiscal year earnings (ahead of the start of 2022).»

6. Alibaba Group

  • Industry: Internet retail
  • Market value: $268.1 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, $99.75) 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 11.6 times earnings estimates for 2022 – a 54% discount to its five-term average forward price-earnings ratio of 25.1.