After a lot of success at the stock markets in 2020, some FTSE 100 stocks have absolutely fizzled out this year. Some correction was probably due. Since the vaccines were developed last year, times have turned for the better for other stocks too, that really suffered in the pandemic. So investor interest was expected to shift in their favour. But I reckon that at least some of 2020’s high-performers have overcorrected. Here are three of them, which I think could make great buys for my portfolio for 2022.
London Stock Exchange: high costs, but strong performance
The first of these is the London Stock Exchange Group (LSE: LSE). I have liked the stock for a long time, but last year was particularly good for it. While it was impacted by the stock market crash of March 2020, by May its share price was already flying. It had risen far beyond even its pre-pandemic highs by July 2020. By comparison, 2021 has not been so kind to the stock.
The company’s acquisition of data and analytics provider Refinitiv has run up costs that investors are finding hard to digest, it appears. I doubt if the group, which has done a great job so far would let the slide continue endlessly. This is especially since the lock-in period of some of its key investors would expire in the next couple of years or so. I would look out for any news from the company that would bring back investor interest in the stock. In any case, I think it remains a financially robust stock, which could start rising over time. I intend to buy it next year.
Ocado: FTSE 100 star of 2020 can turn around
The next stock I like is the beaten down e-grocer Ocado (LSE: OCDO). It was last year’s star stock, gaining investors’ favour because it was exactly in the right place at the right time when the lockdowns happened. It is geared to provide delivery orders, which boomed as the pandemic dragged on. But as Covid-19 has moderated, its stock price has fallen dramatically.
I find this mystifying considering how strong its revenue growth has been well into 2021. Though the one consistent downer to the stock has been the fact that it is loss-making. But I believe that is the price of growing market share in a fast developing and increasingly competitive sector. I think its growth could drive its share price forward in 2022. I bought the stock sometime ago and am sitting on a loss on it. But I feel quite confident that it is only a matter of time before it turns around.
Rio Tinto: a perfect storm
Last, I like the FTSE 100 multi-commodity miner Rio Tinto, which just seems to be running into an awful lot of bad luck these days. It has seen a relatively recent change in management, is under an enquiry for apparently deliberately withholding important information from investors, and reduced forecasts for iron ore prices have impacted its share price forecasts. As a result, after reaching multi-year highs earlier this year, it has tumbled significantly. But its price-to-earnings (P/E) is ridiculously low at 5.3 times, especially when it has an 11.2% dividend yield. I think there is no way but up for the stock. I have bought it.
Manika Premsingh owns shares of Ocado Group and Rio Tinto. The Motley Fool UK has recommended Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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