Energy and medical plays top the 100 best stocks of 2022 list. It isn't a surprise, given the outbreak of war in eastern Europe and the huge pandemic hangover.
Both rerouted the market's playing field in 2022's first quarter. The aggravation of lingering supply chain issues then combined in a tsunami, unleashing the biggest inflation outbreak in four decades. That forced many investors to make big changes to their portfolios.
The Federal Reserve attacked inflation with a baseball bat, pummeling the market with the fastest interest-rate hikes in generations. The pace has slowed into year's end but the impact on the 2023 economy could be painful.
See The 100 Best Stocks Of 2022
Energy companies dominate the best stocks list, thanks to the Russian invasion. But some of these issues lost their luster in the fourth quarter, as crude oil pulled back into the 70s.
Consumer staples, defense and other flight-to-safety sectors showed resilience, as they have in prior downturns. These plays booked strong 2022 returns, as long-abandoned dividend plays attracted lots of capital.
Although not on the top 100 list, sleepy household names like Campbell Soup and Kellogg enjoyed their biggest upside in years.
Let's take a more-detailed look at the 100 best stocks of 2022.
(IBD's 100 Best Companies of 2022 were priced at 12 or higher at the start of the year and have an average daily minimum trading volume of 100,000 shares per day. ETFs are excluded.)
100 Best Stocks: Fossil Fuel Ignites
The Russia-Ukraine war put a fire under commodities in the first and second quarters, lifting crude oil and natural gas to multiyear highs. The inflation shock hit growth stocks and Big Tech like a sledgehammer, triggering a sizable rotation into value and defense by big investors.
All sorts of fossil fuel stocks took off in fabulous rallies as Russia throttled back the natural gas pipeline into Europe. This forced our friends across the Atlantic to turn to the West and its vast natural resources.
Liquefied natural gas (LNG) producers and shippers, in particular, benefited from this unfilled demand. And there is no end in sight, as city-size LNG ships ferry massively-profitable shipments to European harbors through the cold of winter.
Located on the French coast, Scorpio Tankers took 2022's top spot on the 100 Best Companies list, soaring more than 300%. Its 124-ship fleet has gotten top dollar for transporting petroleum products around Europe.
Other top-performing energy shippers include New York-based International Seaways and its 152% return, and Bermuda's Golar LNG, which jumped more than 80%.
Big oil had a great year as well.
Occidental Petroleum made it into the top 10, grinding out more than 117% upside. Warren Buffett's growing stake grabbed regular headlines, supercharging buying interest. The Oracle of Omaha currently has regulatory approval to own up to 50% of OXY shares.
Coal was reborn in 2022 when Germany had to reopen idled power plants to replace dwindling Russian natural gas.
Appalachian coal miner Consol Energy took a top-five spot on the 100 Best Companies list, gaining more than 180%. Tennessee's Alpha Metallurgical Resources also made the top 10, booking a fantastic 140% upside.
Solar Energy Shines
Solar stocks offered rare momentum plays, taking off after the Biden administration signed the Inflation Reduction Act in August. This complex legislation set aside billions to support alternative energy, including a 30% tax credit for solar panels and battery storage.
These hot and cold issues started the year poorly, held down by Congressional gridlock on key issues. That changed overnight when the act passed.
Arizona's First Solar made the top 40 on the 100 Best Companies, booking a 70%-plus return. More impressively, it nearly tripled in price after trading near a two-year low in July. The company is already taking orders out to 2029.
Longtime IBD 50 component Enphase Energy also made the cut, up about 45%.
100 Best Stocks: Medical Miracles
Medical device makers and biotechs show up on best stock lists every year because the market rewards innovation with higher stock prices. However, many of these plays are all-or-nothing affairs, with a promising drug striking out at the FDA, or a surgical device that doctors can't live without.
As a result, most investors need iron stomachs and deep pocketbooks to play these issues successfully over the long-term.
TransMedics Group made the top five list in 2022, gaining more than 220%. It manufactures medical devices that support organ transplants, including OCS Liver and OCS Heart products that have grown popular with surgeons and hospitals.
Amylyx Pharmaceuticals landed in the top 20. The Cambridge lab came public in the teens in January and nearly doubled in price, attracting investors with a pipeline of treatments for amyotrophic lateral sclerosis and other neurological diseases. The stock continues to find support at its 10-week moving average.
Axsome Therapeutics doubled in 2022. The stock soared in November after reporting strong results in the late-stage trial of an Alzheimer's disease treatment. It also boasts an emerging pipeline of compounds for central nervous system disorders, depression and narcolepsy. It broke out of a base Nov. 28 and reached a 20% profit target.
Three Standout Tech Stocks
Few tech stocks made the top 100 on this year's list, highlighting the miserable performance of widely held tech category issues.
Super Micro Computer was the tech sector's top 2022 performer, boasting an 87% return. The server and storage provider crushed the competition, more than doubling its 2021 profit to $5.65 per share. And, despite growth headwinds throughout the tech universe, its earnings are forecast to rise another 79% in the fiscal year ending next June.
Sierra Wireless offered another outstanding tech play, up 65%. However, this was a tough one for investors to capitalize on, with gains driven by Semtech's August acquisition. Speculators had just one day to act on a Bloomberg rumor before the hookup was formalized.
Digi International booked a return of nearly 49%. The Internet of Things (IoT) provider traded near an all-time high, after a steady streak of double-digit percentage quarterly earnings and sales growth.
Follow Alan Farley on Twitter at @msttrader.
