When you consider all your options, you may wonder what stock sectors you should jump on in this "new day and age." After all, with elevated inflation, turtlelike economic growth, and interest rate hikes, what should we look forward to?
In November, the unemployment rate fell to 4.2%, and experts suggest that officials expect unemployment to fall even more by the end of 2022. Industrial production increased and motor vehicle assemblies rose, a suggestion that supply chain issues may slowly grind to a halt.
On the other hand, economic growth may slow, and with continued inflation and interest rate hikes, it's clear that certain industries or market sectors will outperform others.
Two sectors will see success in the year to come: utilities and health care.
Utilities
The utility sector provides basic services through regulated (government) entities or nonregulated entities through contractual services — think electricity, natural gas, and water. If you're looking for long-term holdings for stability, utilities might be your go-to in 2022. The utility fought through any financial ill-effects (pun intended) during the COVID-19 virus.
The best utility investments are companies with a top-notch financial profile and visible growth prospects. Each of the companies below meets those criteria and has the potential to produce above-average total stock returns.
3 Utility Stocks to Consider in 2022
Let's dive in further and actually identify a handful of utility companies to consider investing in this year — Exelon, Entergy, and CenterPoint Energy.
Exelon NASDAQ: EXC
It's hard not to list Exelon NASDAQ: EXC on a list of the best utility stocks, and at $52 billion in market value, it's one of the five top publicly traded utility stocks in the U.S. The company has built a veritable spider web of local power plants, from fossil fuel facilities to hydroelectric dams to nuclear reactors in 48 states, and reaches millions of customers.
Climbing shares and valuation metrics show that Exelon Corporation may be undervalued, signaling a good pick for value investors. Its financial health and growth prospects give it a thumbs up, and Wall Street shows interest in its plans to switch up the company in 2022. A split will result in one energy giant's regulated utilities and the other will make up its power-generating business.
Entergy NYSE: ETR
Entergy NYSE: ETR, with a $21 billion market cap, serves three million customers in the south, including Arkansas, Mississippi, Texas, and Louisiana. The company, headquartered in New Orleans, dips its toes in several types of facilities and markets, including gas, oil, nuclear, coal, hydroelectric and solar. The company has also left nuclear power plants in the dust by developing a long-range renewable energy mindset.
Entergy delivers a reliable positive earnings outlook, not to mention solid dividends to shareholders.
CenterPoint Energy NYSE: CNP
CenterPoint Energy NYSE: CNP, headquartered in Houston, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution, and energy services operations. Due to an Indiana power purchase agreement regarding a 300-megawatt solar array in Indiana, the company topped its earnings expectations and increased its quarterly dividend (+6.3% in October) and shares have increased 29%.
The company owns over $37 billion in assets and over 53% of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly-traded master limited partnership that operates and develops natural gas and crude oil infrastructure assets.
Health Care
Undervalued health care stocks could be the answer to plugging the cracks in your portfolio. As the health care industry normalizes, expect to see pharmaceutical and medical equipment stocks on the rise.
What stocks might you want to add to your portfolio in 2022? Let's find out.
3 Health Care Stocks to Consider in 2022
As you consider health care stocks, the most obvious might seem like stocks related to the COVID-19 pandemic. (Yes, Pfizer made our list.) However, think beyond and into emerging technologies as well for some great indicators.
Pfizer NYSE: PFE
Pfizer Inc. NYSE: PFE, a research-based, global pharmaceutical and biopharmaceutical giant, develops and manufactures medicines and vaccines.
As the world locks horns with the most recent COVID-19 variant, omicron, Pfizer remains at the forefront and in high demand, which will likely boost its results in 2022. A major player in the race to distribute doses, Moderna and Pfizer have come out ahead. Pfizer will do well in the wake of CDC directives for individuals to get a COVID-19 booster. Vaccine sales have boosted Pfizer's results — adjusted EPS rose 129% compared to the year-ago quarter and expanded revenue increased 134% year over year (YOY), outpacing analyst predictions. The COVID-19 vaccine has almost doubled Pfizer's business.
Zimmer Biomet Holdings Inc. NYSE: ZBH
Zimmer Biomet Holdings Inc. NYSE: ZBH aims to benefit from aging baby boomers and out-of-control obesity rates with its orthopedic and musculoskeletal implants.
Zimmer Biomet recently purchased A&E Medical and its complete portfolio of sternal closure devices, including sternal sutures, cable systems, and rigid fixation, along with pacing wire and surgical punch products.
Net earnings for the fourth quarter were $333.7 million, or $440.7 million on an adjusted basis and net earnings on an adjusted basis were $1,181 million. Diluted earnings per share were $1.59 for the fourth quarter, an increase of 3.2% over the prior-year period.
Seagen Inc. NASDAQ: SGEN
Seagen NASDAQ: SGEN is a global biotechnology company that develops cancer therapies through antibody-drug conjugate (ADC) technology. Its research goes toward novel targeted small molecule therapies, with phase I data on SEA-CD40 for treating pancreatic cancer expected in early 2022. The company also focuses on antibodies to build a portfolio of proprietary immuno-oncology agents.
The company reported net product sales of approximately $1 billion for the year and $366 million for the third quarter of 2021. The company added the launch of TIVDAK, a new medicine for women with previously treated metastatic cervical cancer, to its portfolio.
Two for 2022
Ready to tackle utilities and health care in 2022? They could be the right sectors for your portfolio as long as you identify the right stocks within each sector.
Before you consider Exelon, you'll want to hear this.
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