5 Best Stocks to Invest in During January 2022

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2021 was a good year for stocks globally and US stock markets delivered their third consecutive year of double-digit returns. While US markets closed lower on the last trading day of 2021, they looked strong on the first trading day of 2022.

Consensus estimates call for a low single-digit upside in the S&P 500 in 2022 and even the most bullish forecast would mean returns way below the last year. That said, some of the stocks look good buys for 2022. Here are the five such names that you can invest in during January 2022.

  1. Paysafe (NYSE: PSFE)

psfe stock could rebound in 2022

Paysafe is a penny stock and trades below $5, having fallen sharply from the last year’s highs. The company went public in 2021 through a SPAC reverse merger and despite backing from a credible sponsor like Bill Foley, the stock failed to live up to the expectations. Meanwhile, while penny stocks are generally quite risky, PSFE is among the less risky penny names. Also, the company’s valuations also look quite reasonable after the crash.

PSFE stock could rebound in 2022

PSFE stock has come off its recent lows and a recovery looks underway. It should rebound in 2022 after a dismal 2021. PSFE is a mature company and is also positive on the EBITDA level. It has significant scale and processes annual volumes in excess of $100 billion. It has also been expanding internationally to spur its growth.

Last year, it announced the acquisition of SafetyPay for $441 million. Founded in 2007, SafetyPay enables e-commerce transactions and is primarily present in Latin America. It had announced the acquisition of PagoEfectivo which gave it a foothold in Latin America.

The long-term forecast for Paysafe stock looks positive. The company has a market-leading position in the US iGaming market. As more states legalize sports betting it would bode well for PSFE’s long-term forecast. The fintech industry has a positive outlook over the long term and companies like Paysafe look well placed to capitalize on the opportunity.

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  1. PayPal (NYSE: PYPL)

PayPal stock underperformed the markets by a wide margin in 2021. However, it should have a much better 2022 and looks attractive after the recent underperformance. BMO Capital Markets is also of the view that the sell-off in PayPal is overdone and it looks set for a rebound.

BMO finds PayPal a good stock to buy

While BMO lowered PayPal’s target price from $278 to $224, it said that the stock’s risk-reward looks attractive. “We believe PYPL faces uncertainty regarding the impact of competition, macroeconomic trends, and business mix on growth and margins; however, our growth-margin sensitivity analysis implies valuation risks are now skewed to the upside,” said BMO in its note.

Wall Street analysts are also bullish on PayPal and 42 of the 49 analysts covering it have a buy rating. Consensus estimates call for an upside of 38% in PayPal over the next 2 months. In its note, BMO added, “PYPL is the preferred digital wallet option for online merchants [excluding Amazon], offering a seamless and secure check-out experience for consumers. We expect PYPL will continue to grow its volumes above the industry rate (global e-commerce ex-AMZN), with potential upside risk from Venmo, [buy now, pay later], Super-App, [point of sale], and partnership monetization efforts.”

Given its reasonable valuations and the positive outlook for the fintech sector, PayPal looks among the best stocks to invest in during January 2022.

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  1. Amazon (NYSE: AMZN)

Amazon was the worst-performing FAANG stock of 2021. That wasn’t a good omen for Andy Jassy who took over as the CEO from Jeff Bezos towards the middle of the year. Under Jassy, the company has missed consensus sales estimates for two consecutive quarters. Prior to that, the company posted better than expected revenues for three years in a row. However, Amazon looks among the best stocks to buy in January 2022. Notably, several brokerages including Cowen, Bank of America, Jefferies, and Goldman Sachs have listed Amazon as a top 2022 idea.

amazon is a top stock idea for 2022

Amazon stock is a top 2022 idea for many brokerages

Amazon is among those FAANG stocks that have a secular growth path. While Apple’s topline growth is expected to taper down to single digits, Amazon is among those companies which can deliver strong double-digit revenue growth given the exposure to high growth industries like cloud, e-commerce, streaming, and digital advertising. To be sure, the company is facing strong competition in all the verticals. However, Amazon has an impeccable network effect and value proposition which is hard to emulate.

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  1. Citigroup (NYSE: C)

Citigroup stock has underperformed the markets by a wide margin over the last decade. However, it looks like a good bank to own after the underperformance and several Wall Street brokerages see it outperforming in 2022. Bank of America has named Citi a top idea for 2022 and is optimistic about the company under the leadership of its CEO Jane Fraser. Among the first steps that Fraser took was to exit consumer banking in several markets.

Bank of America has listed Citigroup stock as a top 2022 idea

Bank of America analyst Ebrahim Poonawala has listed Citigroup stock as a top 2022 pick and finds the risk-reward attractive. Notably, Citigroup’s valuation is at a significant discount to other bank stocks and it trades at 0.8x its tangible book value. For banks, a price-to-book value multiple below 1x is a sign of undervaluation.

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  1. Peloton (NYSE: PTON)

Peloton lost three-fourths of its market cap in 2021. While US stocks largely closed higher on the first trading day of 2022, PTON closed with losses. It continues to languish near its 52-week lows even as the broader markets are near their all-time highs. That said, PTON looks among the best ideas for 2022 if you can take the extra volatility associated with the stock.

PTON was the worst-performing Nasdaq 100 stock last year

PTON had the dubious distinction of being the worst-performing stock of the Nasdaq 100 index in 2021. While some of the brokerages are still bearish on PTON and do not expect it to rebound anytime soon, at current prices, it looks a good buy. The hybrid model, whether for work or workout, looks here to stay for good and this is where companies like Peloton come in.

However, the company needs to invest in its battered brand following the fatal accident and the negative portrayal in “Sex and the City.” The company has already increased the sales and marketing expense and results would be visible in the long term. Overall, if you are a risk-tolerant investor, PTON is one stock that should be on your watchlist in January 2022.

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About Mohit PRO INVESTOR

Mohit Oberoi is a freelance finance writer based in India. He has completed his MBA in finance as a major. He has over 15 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.