Stock ideas for 2022

Here are 4 new screens from the Fidelity.com Stock Screener.

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The S&P reached pullback territory, the tech-heavy Nasdaq is in correction mode, and small-caps (as measured by the Russell 2000 index) are down more than 18% year-to-date, as of late January.* Investor outlook seems to have dimmed a bit at the outset of 2022—especially compared to last year, when stocks got off to a hot start en route to gaining 28% by year end.

If you think the down start to the year is a buying opportunity, you might consider utilizing a stock screener to search the market for investing ideas that align with your goals. Here are 4 third-party preset expert stock screens using Fidelity's Stock Screener, plus top results for each.

Growth stocks

Growth stocks have underperformed the market at the outset of 2022: The Russell 1000 Growth Index is down more than 8% year-to-date. That compares to a 3% drop for the Russell 1000 Value Index and 5% decline for the S&P 500.

If you think this presents a buying opportunity in growth stocks, Zack's Investment Research, a third-party independent research provider, offers the Top 20% Large Cap Growth Stocks screen. This includes screening characteristics looking for large-cap stocks with year-over-year and quarter-over-quarter growth rates in the top 20% of their industry.

Here are the top 10 results of this screen, sorted by market cap, as of January 27, 2022:

  • Big box retailer TJX Companies (TJX)
  • Investment company KKR (KKR)
  • Insurer American International Group (AIG)
  • Food products supplier Sysco (SYY)
  • Retail operator Ross Stores (ROST)
  • Chemical company LyondellBasell Industries (LYB)
  • Steel producer Nucor (NUE)
  • Insurance provider Berkley (WRB)
  • Chemical producer Westlake Chemical (WLK)
  • Steel producer Steel Dynamics (STLD)

Any time you run a screen, a good next step is to evaluate the composition of the results. Do they skew toward a particular industry or sector? Are the results in line with what you might expect, and do they appear to align with your objectives? If the output seems strange in any way, you may want to consider running a different screen. 

Value stocks

Thus far this year, value stocks have held up better than growth stocks: The Russell 1000 Value Index is down less than half that of the Russell 1000 Growth Index. If you think this trend will have momentum, you might consider the Top 20% Large Cap Value Stocks screen from Zack's Investment Research.

This screen includes characteristics such as large-cap stocks with a low price-to-earnings (P/E) ratio, low P/E growth (PEG) ratio, and high earnings growth ratios relative to industry peers.

Here are the top 10 results of this screen, sorted by market cap, as of January 27, 2022:

  • Oil and gas company TotalEnergies (TTE)
  • Memory and data storage company Micron Technology (MU)
  • Automobile maker Ford Motor (F)
  • Mining company Vale SA (VALE)
  • Biotech firm Regeneron Pharmaceuticals (REGN)
  • Energy company EOG Resources (EOG)
  • Chemical company LyondellBasell Industries (LYB)
  • Home producer D.R. Horton (DHI)
  • Steel maker Nucor (NUE)
  • Financial services firm Syncrony Financial (SYF)

This screen is notable for including several non-US-based firms. For domestic US investors, foreign investments can entail unique characteristics and risks that should be fully understood before any investment is made.

Growth stocks at a reasonable price

It's possible to combine a growth preference while also incorporating value as a screen criterion. Famed investor Benjamin Graham—Warren Buffet's investing inspiration—created the growth at a reasonable price (GARP) methodology, which has been the cornerstone strategy for many investors.

On Fidelity.com, third-party research company Recognia attempts to replicate GARP with a screen that includes a dividend growth rate (5-year average) greater than or equal to 0%, average annualized earnings per share growth over the last 5 years of 3% or more, a P/E ratio less than or equal to 15%, a price/book ratio less than or equal to 1.5, trailing 12 months revenue of greater than or equal to $400M, and current ratio greater than or equal to 2.

Here are the top 10 results of this screen, sorted by market cap, as of January 26, 2022:

  • Chip maker Intel Corp (INTC)
  • Steel maker Nucor (NUE)
  • Steel maker Posco (PKX)
  • Metals miner Sibanye-Stillwater (SBSW)
  • Steel producer Reliance Steel & Aluminum (RS)
  • IT services firm TD Synnex (TX)
  • Metals miner Anglogold Ashanti (AU)
  • Marine products firm Brunswick (BC)
  • Steel producer Companhia Siderurgica (SID)
  • Investment banking firm Evercore (EVR)

In addition to this screen containing multiple foreign-based firms, several results are concentrated in the materials sector. Mining companies can be particularly sensitive to the price of underlying commodities, along with other factors.

Value at a reasonable price

ISS-EVA, a third-party research company, offers a variation of GARP: Value At A Reasonable Price. Like GARP, this screen attempts to find stocks that trade at a discount to their intrinsic value, and it can include growth stocks.

This screen is based predominantly on PRVit scores—a percentile rank of the firm's real, intrinsic value compared to market valuation—and those that have A+ ratings with scores over the 93rd percentile in their sector. PRVit judges intrinsic value according to a firm's demonstrated ability to earn and increase economic profit.

Here are the top 10 results of this screen, sorted by market cap, as of January 27, 2022:

  • Healthcare company Roche Holding (RHHBY)
  • Software company SAP SE (SAP)
  • Oil and gas company Eni Spa (E)
  • Store conglomerate Koninklijke Ahold Delhaize (ADRNY)
  • Lab test processor Laboratory Corp of America (LH)
  • Financial technology company SS&C Technologies (SSNC)
  • Communications company WPP (WPP)
  • Energy company Repsol (REPYY)
  • Steel maker Posco (PKX)
  • Lab test processor Quest Diagnostics (DGX)

As with the other present screens, you should scrutinize both the screening criteria as well as the results. It's also important to note that with preset screens, you can add additional criteria to focus your search on your specific objectives.

Dig deeper

Stocks have shown weakness at the outset of 2022, so you may want to approach the market with more caution than usual. With any stock screen strategy, more research is needed to determine if any of these investments are right for you. You should fully understand the risks involved, and each investing opportunity should be considered within the context of a well-diversified investment strategy that conforms to your specific time horizon, objectives, and risk parameters.

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