Increasing interest rates, inflation, and geopolitical unrest all contributed to the stock market's high level of volatility in 2022, which resulted in unexpected selloffs. The year closed with negative returns for all three major U.S. indices: the Dow Jones Industrial Average was down 6.86%, the S&P 500 index was down 18.11%, and the Nasdaq was down 32.54%. Despite the fact that the indices were down, several equities significantly outperformed the broader market.
It is crucial to examine the past performance of the stocks before any investment decision wisely assuming that the macroeconomic conditions will be similar to those of 2022, and hopefully not worse which is a realistic assumption to make at this point. The only sector that yielded positive returns throughout the past year was the energy sector yielding around 35% in 2022. WTI closed at a 6.7% gain, and Brent closed at around 10% at the end of the year closing prices. According to Simply Wall analysts, It is expected that utilities will have the highest growth of around 10.2% with the renewable energy sector with the most gain at 23.5%, followed by electric utilities (9.7% and water utilities (7.7%).
Focusing on Stocks, we will provide you with some of the stocks that performed well in 2022 beating the broader market.
Super Micro Computer (SMCI) (Chart Seen below) had returns of 86.8% which was one of the best Tech performing companies in 2022. The company has a strong fundamental base in terms of profitability, valuation, efficiency, and growth rates. Net income increased by 624.99 % YoY in Q3’2022. The company also has a high free cash flow and a p/e ratio of 10.3.
Figure 1: Super Micro Computer, Inc. Yearly Percentage Price Gain (1D)| Source: TradingView (2023)
Another stock that showed strong performance during 2022 was First Solar (FSLR) which ended the year with a return of 72%. The company also had strong fundamentals. The renewable energy sector was backed up by the Inflation Reduction Act of 2022 which entails the extension of credits.
Figure 2: First Solar, Inc. (FSLR). Yearly Percentage Price Gain (1D)| Source: TradingView (2023)
Occidental Petroleum (OXY) is another stock that gained around 90% in 2022 with strong fundementals. The company had more than a 400% gain in income, working on reducing its debt, high free cash flow with 750.28% YoY gain. From valuation perspective, the stock is thought to be undervalued.
Figure 3: Occidental Petroleum (OXY). Yearly Percentage Price Gain (1D)| Source: TradingView (2023)
Will these companies keep up their great performance so that we would see them on our list one more time? The question remains. A more important fact is that as an investor, you need to work on your portfolio diversification to have the most gains and least risk as possible.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients