A new year means new investment possibilities. It's going to be hard to top last year's returns in 2022, but finding stocks that are leaning hard into the hottest trends could help supercharge your portfolio in the coming year.
The S&P 500 outperformed the Dow Jones Industrial Average and the Nasdaq by its widest margin in over two decades in 2021, marking only the sixth time it has beaten the other indexes. The benchmark posted gains of 27% compared to a 19% jump by the Dow and a 21% return by the tech-heavy Nasdaq Composite index.
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It's part of a trend of stocks rising sharply since the end of the Great Recession in 2009.
If you ignore the sudden plunge experienced at the onset of the coronavirus pandemic last year, the stock market has been on an incredible yearslong tear. The broad market index has quadrupled in value over that time period, turning an investment of $10,000 into almost $43,000 today.
While that suggests 2022 will have a tough time living up to the recent past, some stocks will do phenomenally well no matter what because they have the tailwind of surefire investment trends.
We all know a stock can offer up unpleasant surprises, but if you have $1,000 ready to put into the market that you won't need for emergencies or to pay your bills, the following pair of stocks could be perfect to invest in for 2022.
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1. Matterport
Pretty much no one was interested in the metaverse until Facebook changed its name to Meta Platforms (META -13.33%) last October, but now it remains a trending search term on Google, and it could be a massive investment opportunity. Cathie Wood of ARK Invest thinks it could be multitrillion-dollar market, while Morgan Stanley (MS -1.57%) pegs its addressable market at $8 trillion. Some even say it could be worth nearly double that figure.
There will undoubtedly be a lot of winners born from the metaverse, but one of the best stocks you can buy with your $1,000 to capitalize on the trend is Matterport (MTTR -1.19%), whose technology will literally help build what the metaverse becomes. Its spatial data platform can transform any physical space into a dimensionally accurate and photorealistic digital rendering.
But maybe the first question we need to answer is, What the heck is the metaverse anyway? Because it's really not much of a functional thing at the moment, it's hard for many to wrap their heads around how they can profit from it, let alone participate in it.
Think of the metaverse as interacting with people and products in virtual 3D environments by combining elements of social media with virtual and augmented reality to shop, socialize, conduct business, and play games.
It might sound like an inferior way for humans to interact (raises hand), but many people want to participate, and that's why Matterport matters. Subscribers to Matterport's service can capture, digitize, and manage one or more spaces, and for a scaled fee, can share them and collaborate with others. Total third-quarter subscribers jumped 116% year over year to 439,000 while paid subscription revenue surged 36% to $27.6 million.
Most subscribers are still at the free level, which allows them to get familiar with the software and managing a space, but the company is experiencing strong conversion numbers (up 35%), and it has formed relationships with numerous companies, most notably its recent partnerships with Amazon (AMZN -3.04%) and Meta Platforms.
Matterport is admittedly something of a risky bet on a speculative technology, but with its recent addition of Android capabilities, it should open the door for potentially millions more people worldwide to enter the metaverse.
After the stock's 45% plunge in December, the virtual world of Matterport could be just the place for your physical investment dollars.
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2. PubMatic
Programmatic ad-buying platform PubMatic (PUBM -3.04%) operates in the cloud like Matterport, but its product is much more tangible. It allows publishers to sell their ad space to advertisers while helping demand-side buyers by integrating its tools into other leading platforms. It uses artificial intelligence and machine learning to accomplish the task of optimizing ad placement for clients.
In the third quarter, PubMatic processed 23.9 trillion impressions, double the number from last year, as publishers used its platform to increase their ad inventory. Mobile and omnichannel video revenue soared 64% in the period and now represents two-thirds of its revenue.
Excluding political ads, which obviously skew the results from two years ago, spending across every vertical was up at least double digits over the third quarter of 2020.
This focus on digitally native advertising has helped PubMatic grow at around twice the global spend on digital advertising, which is expected to grow about 20% or so this year, but by just 10% to 12% next year.
The surge it has witnessed in connected-TV revenue, which is up 700% from last year, helped its net dollar-based retention rate, or the number of existing clients from the year-ago quarter that spent 50% extra or more in the current quarter, climb 157% year over year. eMarketer predicts up-front spending on connected-TV advertising will hit almost $6 billion in 2022, a 32% increase over 2021.
PubMatic has handily beaten Wall Street earnings forecasts for the last four quarters, and by an increasingly wide spread as the year progressed. Analysts have a consensus price target of $48 a share, or some 43% above its current price. But if PubMatic continues trouncing estimates as it has, look for this digital ad-buying and selling platform to tack on even greater growth. An investment of $1,000 could be worth a lot more in one year's time.
