This article is an excerpt from Barron’s 10 favorite stocks for 2022, published on Dec. 17. To see the full list, click here.
IBM could be one of the big turnaround stories of 2022. Barron’s highlighted the company’s improving outlook in a recent cover story, calling it “ Microsoft Jr.”
Under CEO Arvind Krishna, IBM (ticker: IBM) has spun off a pedestrian business of managing data centers into Kyndryl Holdings
(KD), refocused on the cloud and artificial intelligence, and vowed to start growing again for the first time in about a decade.
Wall Street is skeptical about IBM’s prospects, but one bull, BofA Global Research’s Wamsi Mohan, has compared Krishna to Satya Nadella, the Microsoft CEO who transformed the company over the past seven years.
IBM, whose shares trade around $126, is valued at 11 times projected 2022 earnings. And it has the highest dividend yield in the Dow Jones Industrial Average, at 5.3%.
If Krishna is successful in boosting sales and margins while making IBM relevant again, there could be a lot of upside in a largely forgotten stock.
Barron’s Stock Picks for 2022
We have identified these 10 as among the best candidates to outperform the market next year.
| Company / Ticker | Recent Price | YTD Change | 2021E EPS | 2022E EPS | 2022E P/E | Dividend Yield | Market Value (bil) |
|---|---|---|---|---|---|---|---|
| Amazon.com / AMZN | $3,377.42 | 4% | $41.11 | $51.37 | 65.7 | None | $1,713 |
| AT&T / T | 23.71 | -18 | 3.38 | 3.17 | 7.5 | 8.8% | 169 |
| Berkshire Hathaway / BRK.A | 454,550.00 | 31 | 17,466.30 | 18,928.50 | 24.0 | None | 673 |
| General Motors / GM | 58.39 | 40 | 6.73 | 6.93 | 8.4 | None | 85 |
| Hertz Global Holdings / HTZ | 21.01 | -22* | 4.02 | 2.55 | 8.2 | None | 10 |
| IBM / IBM | 125.93 | 5 | 10.05 | 11.04 | 11.4 | 5.2 | 113 |
| Johnson & Johnson / JNJ | 173.01 | 10 | 9.83 | 10.38 | 16.7 | 2.5 | 455 |
| Nordstrom / JWN** | 20.05 | -36 | 1.27 | 1.99 | 10.1 | None | 3 |
| Royal Dutch Shell / RDS.B | 42.82 | 27 | 4.86 | 6.19 | 6.9 | 3.9 | 166 |
| Visa / V*** | 214.37 | -2 | 5.91A | 7.04 | 30.5 | 0.7 | 467 |
*Since July 1. **Estimates for Jan. 2022 and Jan. 2023 fiscal year ends. ***Sept. fiscal year end. E=estimate. A=actual.
Source: FactSet
Write to Andrew Bary at [email protected]
