The following major stocks have been underperforming in 2021. That may be bad news for those who hold these stocks but good news for value investors looking for something to buy before 2022 begins.
Value investing involves looking for high-quality companies whose stock prices have dropped due to temporary issues. Intelligent investors can take advantage of the short-term dip in the price of these stocks and get a position that will be lucrative in the long term. Here are five stocks that are not performing at their best now but may see upside in 2022.
- Lockheed Martin
- Clorox
- Amazon
- IBM
- Berkshire Hathaway
Lockheed Martin
Lockheed Martin is a defense stock with a strong core business of aircraft, missiles, and radar systems and a high-growth satellite segment. Analyst Cathie Wood of Ark Invest identified Lockheed Martin’s satellite division as a reason to see upside in this stock and predicted growth.
Although this stock has been a sturdy holding, the defense industry has been hit recently because President Biden will cut defense spending and the pullout of troops from Afghanistan. However, this news seems to have been absorbed to the extent that Lockheed Martin may see an upside soon.
Clorox
Clorox soared during the pandemic as people were in a rush to disinfect any spaces they came into contact with. Given the decline in COVID numbers, sales of Clorox are not as strong as they were in 2020, and the price of the stock has suffered as a result. However, since Clorox is a consumer staple, people will always need it, and its stock prices are expected to correct back upward in 2022. At 30% below its 52-week high, the time to buy Clorox is now.
Amazon
People may be shocked to discover that the world’s largest online retailer’s stock is undervalued. It isn’t that Amazon has been underperforming in its business–far from it. Instead, the fact that this retail giant keeps growing makes it seem undervalued, and its stock price has not only not kept up with its current growth but does not take into account its growth trajectory. Although it is not a great practice to “chase” growth stocks, Amazon may be the exception.
IBM
IBM was founded a century ago, and until very recently has seemed to show its age. However, IBM’s plans to innovate are likely to bear fruit, and it may be worth betting on this tech pioneer. The company will spin off its traditional business into an entity called Kyndryl and focus the core of IBM on cloud computing software and data center development. So as IBM finally arrives in the 21st century, its stock price will also catch up.
Berkshire Hathaway
It is appropriate that a company owned by the consummate value investor Warren Buffett is on this list of value stocks. Although its stock price seems high, Berkshire Hathaway has always been a good investment because of its slow and steady growth in value. Berkshire Hathaway owns various businesses, including insurance company GEICO, the largest railroad in the U.S., utility companies, and has large stakes in Coca-Cola, Apple, and Bank of America.
Berkshire Hathaway is a good buy now because its historically high stock repurchase in 2020, to the tune of $24.7 billion, will continue in 2021. When Buffett repurchases shares in his own company, he sees value in it, and so should the average investor.
Look to Value Stocks
The volatility of the current era, given COVID-19 and global instability, has put value investing on the sidelines in the minds of many investors. However, Warren Buffett’s philosophy of buying undervalued stocks and holding them long-term still holds, evidenced by his strategy of buying back shares of Berkshire Hathaway. In a diversified portfolio, there is room for growth stocks and value stocks. This list is an excellent place to start to see some upside in your portfolio.
