Best investment options for 2022

This article was first published on Canstar 8 February 2022.

There tends to be two major hurdles when moving from a saver to an investor. The first is simply getting started and the second is figuring out what to invest in.

Outlook & stock picks for investors in 2022

To help you decide what stocks you may want to invest in, the research team at Bell Direct has just released their analyst outlook and stock picks for 2022.

They include two of the major banks: ANZ Banking Group (ASX:ANZ) and National Australia Bank (ASX:NAB). Since the global financial crisis, both have undergone significant transformation to improve earnings quality and consistency.

Below are some other stocks that you may want to explore and research further.

Stock picks in the dairy sector

As for investments in the Agricultural and the fast-moving consumer goods (FMCG) sector, these are higher risk and volatile stocks. Therefore, there has been a focus on the investments that either have a structural uplift in return-on-invested-capital (ROIC), a cyclical growth story, or counter-seasonal crop exposures. Bega Cheese (ASX:BGA) also made the list, the company recently acquired Lion Diary & Drinks (ASX:LDD). The a2 Milk Company (ASX:A2M) is another in this sector. It is predicted that the company’s Earnings Per Share (EPS) may double by FY26, if the company achieves its China offline expansion strategy, while recovering 50% of its lost sales from FY20-21. Synlait Milk (ASX:SM1) is also listed.

Technology stock picks

Looking at the technology sector and considering the likelihood that domestic and offshore interest rates will start to rise, the tech stocks that made the list had reasonable cash flows and earnings and strong growth outlooks. These stocks are more likely to perform well in a rising interest rate environment. Stocks such as Infomedia (ASX:IFM), a provider of software solutions for the global automotive industry. Technology One (ASX:TNE), a provider of enterprise resource planning software to large corporate and government agencies. And Life360 (ASX:360), the developer of a family mobile app, that provides communications, driving safety and location sharing.

Retail & Professional Services stock picks

Stocks that made the cut in Discretionary Retailers and Professional Services space had the following factors:

(1) the prospects of rising interest rates and emerging inflationary pressures,
(2) increased international travel will reduce share of wallet to retailers, and
(3) the ongoing risks surrounding the pandemic.

These stocks included Accent Group (ASX:AX1), City Chic Collective (ASX:CCX) and Propel Funeral Partners (ASX:PFP).

Resources & Precious Metals

Within the Resources and Precious Metals sector, Nickel Mines (ASX:NIC), Regis Resources (ASX:RRL) and Chalice Mining (ASX:CHN) were included in the list. And their energy investment choices are Cooper Energy (ASX:COE) and Boss Energy (ASX:BOE).

The strategic minerals sector continues to benefit from dominant market themes of ESG and decarbonisation. The stock picks are Liontown Resources (ASX:LTR), Lake Resources (ASX:LKE) and Alpha HPA (ASX:A4N).

So, there are 20 stocks that some analysts recommend exploring further. As always you will have to select stocks that are right for your individual circumstances. It’s a good idea to follow four important investment principles when investing.

Four investment principles

Firstly, focus on an investment goal. For example, saving for a new car, saving for a house deposit, and saving for retirement. Remember it’s time in the market, not timing the market that is important so starting your investment journey now is very important.

Secondly, decide on an investment timeframe. Break down your investment goals into short, medium, and long-term goals. This will determine the investment timeframe for each goal.

Thirdly, keep costs low. With an array of low-cost investment options now on the market, it pays to shop around for the right investment product for you. You don’t have to pay yearly management fees on a portfolio of stocks that you select yourself.

Lastly, diversify to minimize risk. How you choose to invest across different asset classes is known as your strategic asset allocation. Most investors have a mix of growth assets such as shares in their portfolio, along with more defensive assets like fixed income and cash.

Thinking of investing?

The past year has seen a number of stocks boom and reach new heights, which can be quite alluring for some investors. However, it is always best to do your research and bear in mind that past performance is not an indicator of future performance. If ever in doubt, seek the advice of a financial adviser.