(1:00) - Are We Setup For A Goldilocks Economy Going Into 2022? (11:10) - What Sectors Poised To Benefit From The Most Growth? (26:35) - Top Picks: What New Trends Are Emerging Heading Into The New Year? (36:00) - Episode Roundup: MU, AMD, NVDA, URI, KBH, LEN, TOL, PHM, MHK, WHR, WCC, WR, CRWD, PANW, QLYS, BRKB Podcast@Zacks.com
Welcome to Episode #295 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey talks with Zacks Chief Equity Strategist, John Blank, about his outlook for 2022.
The US economy is recovering from last year’s COVID shutdowns and restrictions. Over the last 3 quarters, the US economy has averaged GDP of about 5.8%. That’s hot. It’s no wonder that unemployment has fallen to 4.2% and that job openings and quits are at record highs.
But what does that mean for stock investors?
What stocks should be on your wish list for next year?
We Are Still Nesting
Consumers are still moving around the country, buying new homes, furniture, rugs, plants and outdoor grills.
1. KB Homes ( KBH Quick Quote KBH - Free Report)
KB Homes is one of the country’s largest home builders. This is a golden time for the builders with mortgage rates at record lows.
KB Homes’ earnings are expected to rise 88.5% in fiscal 2021 to $5.90 from $3.13 last year. The good times are expected to continue in fiscal 2022, jumping 33.6% to $7.88.
KB Homes shares have jumped 64% this year, easily beating the S&P 500.
Is the rally in KB Homes shares over?
It’s dirt cheap, even with the rally. KB Home has a forward P/E of just 5.6.
It also has a PEG ratio of only 0.15. A PEG under 1.0 usually indicates a company has both value and growth, a rare combination.
Is the bull rally in KB Home just beginning?
2. Mohawk Industries ( MHK Quick Quote MHK - Free Report)
Mohawk Industries is the world’s largest flooring company.
Over the last 3 months, shares have gone on sale, falling 7.6% during that time period.
Mohawk is cheap, with a forward P/E of just 11.8.
Mohawk Industries is expected to grow earnings by 68% in 2021 to $14.83 after making just $8.83 last year. But the analysts are still bullish about 2022 as earnings are expected to rise 6.9% to $15.85.
Is Mohawk Industries a deal heading into 2022?
Are the Semiconductors Still a Buy? 3. Micron ( MU Quick Quote MU - Free Report)
Micron, one of the leaders of memory and storage in the semiconductor industry, has underperformed the S&P 500 in 2021.
Shares are up just 14% versus nearly 25% for the S&P 500 year-to-date.
But earnings are on the move higher. Micron is expected to make $8.84 this fiscal year, up 45.9% from the $6.06 it made last year.
Next fiscal year looks even hotter, with earnings expected to rise another 18.5% to $10.47.
Micron is on sale again. It is trading with a single digit forward P/E of just 9.3.
Should you be diving into Micron in 2022?
Cybersecurity Stocks Have Sold Off: Are They a Deal? 4. Radware ( RDWR Quick Quote RDWR - Free Report)
Radware offers cyber security and application delivery solutions for physical, cloud and software defined data centers.
Shares of Radware have fallen 10% over the last month and are now up just 8.5% year-to-date.
But is Radware really on sale?
Earnings are expected to rise 26.5% this year and another 22.2% in 2022. But shares are still trading with a forward P/E of 37.
Should Radware be on your wish list for 2022?
5. Palo Alto Networks ( PANW Quick Quote PANW - Free Report)
Palo Alto Networks is a global cybersecurity leader. It has been a superstar stock, gaining 300% over the last 5 years.
Year-to-date, Palo Alto Networks is up another 47.3% and has only fallen 4.3% over the last five sessions while the rest of the growth stocks were selling off hard.
Earnings are expected to be up 17.9% in fiscal 2022 and another 23.3% in fiscal 2023.
But at 69x forward earnings, is Palo Alto Networks too expensive to be on the wish list for 2022?
What Else Should You Know About the Outlook for 2022?
Tune into this week’s podcast to find out.