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10 Great Stock Picks For 2022 From Top-Performing Fund Managers

10 Great Stock Picks For 2022 From Top-Performing Fund Managers
Written by publisher team

The stock market had another great year despite fears of rising inflation and concerns about the coronavirus pandemic hampering economic recovery. The S&P 500 is up 25% so far and continues to post record highs.

Stock markets may have a tougher year in 2022 with inflation hitting a nearly 40-year high and the Federal Reserve curtailing its easy monetary policy while raising interest rates. Persistent imbalances in supply and demand – exacerbated by the emergence of the new omicron variable – also continued to complicate the economic recovery. While many Wall Street analysts are forecasting a positive 2022, investors should expect returns to be significantly lower than in previous years.

We queried Morningstar to identify some of the top performing fund managers, all of whom have consistently outperformed their benchmarks on a longer-term basis over a period of three years, five years or ten years. Forbes He spoke with five senior portfolio managers who oversee nearly $25 billion in assets. Here are their best stock ideas for the coming year.

John W Rogers Jr.

Ariel box: The flagship value fund, primarily focused on small and medium-sized businesses.

Return 2021: 25.7%, Average annual return for 10 years: 14.4%

ViacomCBS (more)

Rogers loves media and entertainment giant ViacomCBS, which is among the cheapest holdings in Ariel’s fund today. While the stock “hasn’t gone anywhere for long,” dropping more than 20% in 2021, it sees significant value in the company in the coming year. He says ViacomCBS has a “wider range of content that many of its competitors don’t,” including the likes of streaming service Paramount+ and stations affiliated with CBS, Showtime and Pluto TV. With the company making significant investments in broadcasting, Rogers particularly likes Paramount+ and keeps a close eye on the platform’s subscriber growth. While the stock peaked at nearly $100 per share earlier this year, it declined during the second half of 2021 — with Ariel building a steady position during that time.

Madison Square Garden Entertainment (MSGE)

Ariel’s cheapest and largest holding currently is Madison Square Garden Entertainment, which sells at a discount of more than 50% of private market value, according to Rogers. In addition to owning New York’s famous Madison Square Garden, the company owns other assets that aren’t priced by the market, including Rockettes and Radio City, the regional sports network that broadcasts Knicks, Rangers, and several premium hospitality groups. Rogers is most excited about MSG Sphere, the company’s new arena in Las Vegas that is due to open in 2023. “That would be a big deal — there would be nothing like it in the world,” he says, adding that if MSGE gets it right It could franchise the model and build similar venues in other parts of the world including London or Hong Kong. Heading into the next year, Rogers is keeping an eye on the naming rights for the Vegas Sphere: “You can see a blockbuster tech company getting the naming rights, which must be a huge deal.” The stock underperformed in 2021, however, dropping more than 37% on fears of a spike in coronavirus cases, which could lead to another shutdown of live events.

Amy Chang

Focus Algeria Med Cap Fund: A concentrated portfolio of about 50 medium-sized companies.

Return 2021: 6%, Average Annual Return Since Inception (2019): 31.4%

Signature Bank (SBNY)

Zhang likes this New York-based commercial bank, which is set to benefit not only from a cyclical recovery but also from exposure to the early rounds of a more secular crypto-economy. Signature Bank, which builds “premium relationships” with customers using a unique “single point of contact” and a customer-centric approach, has seen exponential growth in deposits in recent years. With a favorable backdrop for banks next year amid a high interest rate environment, this should provide a boost to earnings, Zhang predicts. Even with shares up nearly 120% in 2021, valuations are still convincing, with Signature Bank trading at a discount and growing faster than many of its peers. While the bank’s core business remains strong, another “exciting growth driver” is the digital payments platform Signet, a real-time exchange platform that leverages blockchain technology and gives customers exposure to cryptocurrencies. “We think there’s more upside next year – it’s not a well-known story yet, and future growth hasn’t been fully priced in,” Zhang says.

SiteOne Landscape Supply (SITE)

Zhang also likes “the long-term manufacturer” of SiteOne Landscape Supply, the largest nationwide wholesale distributor of its kind in North America. Although “inflation is front and center” in the current environment, SiteOne has largely offset the pressure thanks to its broad reach and position as the “dominant market leader,” Zhang says. As the leading merger and distributor in the landscape supply industry – with a proven track record of mergers and acquisitions – the company has strong pricing power that allows it to continue to grow its margins. SiteOne currently has about 13% of the market share – but could grow to as much as 50% over the next few years amid strong revenue growth, Zhang predicts. Another positive trend, she adds, is that the company could benefit from the secular trend of outdoor living, which has been accelerated by the pandemic, with a hybrid business model “that is here to stay.”

Kirsty Gibson

US Equity Growth Fund Billy Gifford: Concentrated portfolio of growing companies.

Return 2021: -4%, Average annual return for 3 years: 50.4%

Snap (SNAP)

One of the fund’s newer additions – from early 2021 – is the social networking platform Snap, which is very popular among young teens. While most of the company’s revenue comes from advertising, Snap is slowly turning into an augmented reality company, which could lead to a “more profitable business model” over the next five to 10 years, Gibson predicts. She’s particularly excited about the Camera Kit, which makes Snap’s augmented reality camera tools available for any developer to use in their own apps. This potentially opens a “new revenue avenue” for Snap where it can help operate the augmented reality infrastructure for apps outside of its traditional ecosystem, Gibson says. Although shares are down about 10% in 2021, Gibson notes that “a lot of Snap’s recent struggles have been short-term headwinds, as opposed to the underlying challenges to their business.” It insists that user growth and new product innovation are on the “right track”. “It’s about overcoming externalities in the short term.”

confirmed (AFRM)

Baillie Gifford’s US Equity Growth Fund also bought shares in Fintech firm Affirm after its initial public offering in January. Affirm, whose shares are up just over 2% this year, acts as a financial lender offering a buy now, pay later product that lets customers pay for items in installments. With Affirm choosing to “focus on the customer rather than profit from their challenges,” this “special merchant-consumer relationship” is a good example of using the right data to build trust with consumers, Gibson says. Collectively, the company already has partnerships that account for nearly 60% of US e-commerce including major retailers such as Walmart, Shopify and Amazon. Affirm also recently released its own debit card +, which combines the benefits of a traditional debit card with a buy now, pay later model. Unlike a traditional bank, it has more data on people and purchases, allowing the company to offer more comprehensive products and “redefine what financial services should be,” Gibson says. With the opportunity to launch more banking products in the coming years, “consumers will want the package they create,” she predicts.

Nancy Zevenbergen

Zevenbergen Growth Fund: Consumers and big-cap technology companies.

Return 2021: -12.5%, 5-year average annual return: 37.7%

Silvergate Capital (SI)

Zevenbergen likes this federally regulated bank, which has the largest number of cryptocurrency clients in the US, as a “way to participate in the emerging crypto market.” Silvergate Capital has over 1,300 clients including Square and Coinbase on its Silvergate Exchange network, which allows cryptocurrency exchanges and institutional investors to transact 24/7. It bought the stock for the first time, as its shares jumped 111% in 2021 — earlier this year and has been adding to it ever since, remaining bullish about the company’s planned joint crypto venture with Meta, formerly known as Facebook. The bank pays no interest on deposits – so as the Fed seeks to raise interest rates next year, that should boost Silvergate’s earnings, Zevenbergen predicts. As 2022 approaches, it is closely watching “more institutional adoption of cryptocurrencies” and whether Silvergate expands beyond US stablecoins. “The regulatory part of this equation is difficult and takes time,” she says. “Obviously it’s still early days, but US companies are looking into this whole space, and SilverJet is well positioned to facilitate that.”

snowflake (snow)

Another company Zevenbergen expects to generate revenue growth of more than 50% is data storage and management company Snowflake. It purchased the company’s shares for the first time after its initial public offering in September 2020, steadily adding to the position since then through corrections. “Data is as much the new oil as it is the asset,” Zevenbergen describes, “The need for American companies — all industries — to collect, maintain and manage their data is ever-growing.” What’s more, Snowflake “brought to market in a unique way” with a consumption-based model rather than a software-as-a-service model, which appears to be the direction most companies are heading now, she says. As companies everywhere continue to transition to digital technology, Snowflake is well positioned to take advantage of it as it helps companies collect and understand data. While shares are up 19% in 2021, Zevenbergen expects the company to continue signing new deals and building relationships with existing customers, which should help Snowflake deliver solid earnings and revenue growth in 2022 and beyond.

Leon Cooperman

Omega Consultants: It closed in 2018, and now runs a family office

Average annual return since incorporation (until 2018): 12%

Paramount Resources (PRMRF)

Copperman sees tremendous value in Canadian oil and gas company Paramount Resources, whose shares are already up 328% in 2021. He first began buying the stock at the beginning of the year, on the understanding that supply and demand for the energy sector will remain strong. Paramount’s market capitalization is now just over $2 billion, with revenue and profits rebounding strongly since the oil price plunge amid pandemic shutdowns in mid-2020. Cooperman says the company, founded by Canadian oil baron Clayton Riddell, has solid reserves and a strong management team. . He also especially likes the fact that Paramount tripled its annual dividend and has share buybacks. Expecting oil supply and demand to remain tight next year, Cooperman anticipates further gains in 2022.

Merion Technologies (MIR)

Among Cooperman’s newest favorites is Mirion Technologies, a global provider of radiation detection and measurement solutions. The company partnered with Goldman Sachs, which holds a large stake, to go public via a SPAC deal in June 2021, with shares up nearly 5% since then. Cooperman describes Mirion as a “quality company” with a strong management team that should deliver medium to high single digit revenue growth over the coming years. Cooperman, who argues that Mirion is trading at a 40% discount to its peers, bought the stock when the company first became public and has been steadily adding to its position ever since. Cooperman notes that he sees nothing but upside in the future, as the company offers its detection solutions to the nuclear, defense, medical, and research end markets — all of which are growing sectors.

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