It has been a pretty spectacular year for the stock market, with all three major indexes hitting record highs and investors making pots of money. A constructive economic policy helped steer the market through pandemic-induced challenges. Stimulus payments, the Federal Reserve’s accommodative monetary policy, mass vaccination and steady resumption of business activities all contributed to the speedy recovery of the economy. Strong corporate earnings further boosted investor sentiment.
Impressively, the S&P 500 hit a 52-week high of 4,807.02 on Dec 28. The index has risen 27.4% so far in the year. A similar momentum was seen in the tech-focused Nasdaq Composite Index that attained a 52-week high of 16,212.23 on Nov 22. We note that the benchmark index has so far advanced 22.5%. Meanwhile, the Dow Jones Industrial Average has jumped more than 18.9% year to date. The index touched a 52-week high of 36,565.73 on Nov 8. Will the Euphoria Continue in 2022?
Well looking at the bullish run in 2021, market pundits are of the opinion that the rally in the stock market might continue in the new year, thanks to increasing risk appetite among investors. However, bouts of volatility are possible, mainly stemming from conflicting headlines on inflation, supply chain and the new COVID-19 variant — Omicron. For now, the market has already factored in the Federal Reserve’s moves to wind down the bond-buying program by March and hike interest rate three times in 2022 to tame inflation.
Meanwhile, the Federal Reserve raised its 2022 real GDP forecast to 4% from 3.8%. The Jerome Powell-led Fed now envisions the unemployment rate to be 3.5% in 2022, down from the prior estimate of 3.8%. We observed that the U.S. unemployment rate tumbled by 0.4 percentage point to 4.2% in November 2021, indicating the job market is rapidly tightening. Challenges will definitely be there in 2022, as strains of the coronavirus pandemic will not fade out soon. Also, some pullbacks and corrections in the equity markets might limit the scope of making double-digit returns. But it also holds true that investors have grown smart and can sense any change in market dynamics. Looking into 2022, increasing vaccination rates, easing supply pressures, rising wages and higher consumer spending are likely to lend support to the market. Also, President Joe Biden’s infrastructure package should boost economic growth. Where to Invest?
Typically, growth stocks tend to perform well when the economy starts to pick up. To fetch higher returns, the best option is to invest in low-priced stocks having sound fundamentals with sales and earnings growth potential. Such companies generally do not pay dividends, instead they reinvest profits into businesses.
For today, let’s shift focus on stocks that are trading under $10 a share. Well, low-priced equities may not seem attractive to some because few people follow them and lesser has been said about them. But it is also true that these low-priced stocks could be greatly rewarding especially in terms of growth. That said we have highlighted four stocks on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B. You can see . the complete list of today’s Zacks #1 Rank stocks here 4 Gems Trading Under $10 Nissan Motor Co., Ltd. ( NSANY Quick Quote NSANY - Free Report) , which manufactures and sells vehicles and automotive parts globally, is a potential pick. The company’s vision is to expand operations worldwide and accelerate the electrification of its vehicle lineup. Taking into account customer demand for a diverse range of exciting vehicles, the company plans to launch 23 new electrified models, including 15 new electric vehicles by fiscal 2030. Nissan Motor has a trailing four-quarter earnings surprise of 13.1%, on average. The Zacks Consensus Estimate for the financial year 2022 sales and EPS suggests growth of 8.6% and 72.8%, respectively, from the year-ago period. NSANY has a Zacks Rank #1 and a Growth Score of B. Arko Corp. ( ARKO Quick Quote ARKO - Free Report) , which operates convenience stores in the United States, is a solid bet. The company’s merchandising strategy, growing store base and strategic acquisitions bode well. Last month, Arko acquired 36 company-operated Handy Mart convenience stores and gas stations, and one under development site, located in North Carolina. Arko's bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the last two reported quarters. The Zacks Consensus Estimate for financial year 2022 sales and EPS suggests growth of 8.3% and 36.6%, respectively, from the year-ago period. ARKO has a Zacks Rank #2 and a Growth Score of A. We suggest investing in Arcos Dorados Holdings, Inc. ( ARCO Quick Quote ARCO - Free Report) , the world’s largest independent McDonald’s franchisee, operating the largest quick-service restaurant chain in Latin America and the Caribbean. Strategic investments made over the years positions it well to capitalize on growth opportunities and overcome challenges. Arcos Dorados’ “Three D's strategy” — drive-thru, delivery and digital — helps it to boost sales and profitability. Markedly, the company’s free-standing restaurant portfolio provides it a structural competitive advantage. Arcos’ bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the last two reported quarters. The Zacks Consensus Estimate for financial year 2022 sales and EPS suggests growth of 10.4% and 255.6%, respectively, from the year-ago period. The stock has a Zacks Rank #2 and a Growth Score of A. ARCO has a long-term earnings growth rate of 42.9%. You may invest in Cerus Corporation ( CERS Quick Quote CERS - Free Report) , which develops and supplies vital technologies and pathogen-protected blood components to blood centers, hospitals, and ultimately patients. During the third quarter of 2021, Product revenues increased 53% year over year to $36.1 million, driven by increased sales of the INTERCEPT platelet products to blood center customers across the United States. Cerus Corporation has a trailing four-quarter earnings surprise of 4.1%, on average. The Zacks Consensus Estimate for financial year 2022 sales and EPS suggests growth of 19.7% and 16.4%, respectively, from the year-ago period. CERS has a Zacks Rank #2 and a Growth Score of A.