The U.S. stock market hasn’t followed the script in 2021. The
index returned 26% through Dec. 16, well ahead of the roughly 10% gain projected, on average, by strategists at the start of the year.
Many expected value stocks to finally best their growth counterparts after a decade of underperformance. But after a strong start this year, value is ending in a familiar place, about five percentage points behind growth, based on the large-cap
Every December, we identify 10 promising stocks for the new year. Our picks for 2022 have a value tilt and reflect input from Barron’s writers, in particular Eric J. Savitz, Al Root, and Nicholas Jasinski.
Royal Dutch Shell (ticker: RDS.B),
Johnson & Johnson (JNJ),
Hertz Global Holdings (HTZ), Amazon.com (AMZN),
Berkshire Hathaway (BRK.A and BRK.B),
AT&T (T), and
General Motors (GM). Nine are new; Berkshire is the only holdover.
Our picks for 2021, out on Dec. 18, 2020, narrowly trailed the S&P 500, returning 26.9% on average, less than a percentage point behind the benchmark average. We nabbed some big gainers in
Goldman Sachs Group (GS),
Eaton (ETN), and
Apple (AAPL), but flopped with
Merck (MRK), gold miner
Newmont (NEM), and
Madison Square Garden Entertainment (MSGE).
The backdrop for stocks could be tougher in 2022 after three consecutive years of big gains—the S&P 500 returned 31.5% in 2019 and 18.4% in 2020. The Federal Reserve is widely expected to raise interest rates in 2022. That could help value stocks finally win out over their growth counterparts.