Market volatility can be unnerving for folks looking for a calm way to accomplish their 2022 financial goals. But growth stocks have long been one of the best ways to compound wealth over time, even though they tend to be more volatile than, say, blue chip Dividend Aristocrats.
Ford (F 0.08%), Textron (TXT -1.33%) and Wallbox (WBX -2.11%) are three growth stocks that could continue to crush the market in 2022. Here's what makes each a great buy now.
Image source: Ford Motor Company.
From stalwart to growth spurt
Daniel Foelber (Ford): Lucid Group (LCID 1.19%) and Rivian Automotive (RIVN -2.21%) captured the auto industry's spotlight in 2021 after both electric vehicle (EV) newcomers went public and promised big plans for 2022 and beyond. Lucid and Rivian finished the year with expensive valuations of $62.6 billion and $93.4 billion, respectively, compared to just $83 billion for legacy automaker, Ford. And that's after share prices of Ford gained over 136% in 2021.
Long-time industry watchers may be scratching their heads and wondering how a stalwart like Ford can be classified as a growth stock. Make no mistake, Ford is a bulky business with a massive workforce and manufacturing footprint. But it's also one of the most aggressive EV investors, arguably ahead of its electric truck competitors like Rivian or General Motors.
Demand for Ford's F-150 Lightning electric pickup is so strong that Ford had to stop taking reservations after they passed 200,000 in December. On Jan. 4, it said it was increasing its F-150 Lightning capacity to 150,000 units per year in response to the better-than-expected demand. The Lightning gets a lot of attention. Deservingly so. But the Ford Mustang Mach-E and E-Transit electric van shouldn't go unnoticed. Ford sold over 27,000 Mach-Es in 2021 -- more EVs than Lucid plans to sell in all of 2022. Given its strong brand and exciting new products, Ford stands out as a top automaker to buy in 2022 and hold for years to come.
Textron will have another strong year in 2022
Lee Samaha (Textron): The company's performance in 2021 (up nearly 60%) could be the subject of a trivia question in the future. It was a challenging year for the aviation and defense industries, let alone for companies exposed to vehicle production, but Textron bucked the trend. The reason?
It comes down to its business jets and aircraft in its key Textron Aviation segment. Business jet departures are significantly up from 2019 even with a slowdown in 2020. As such, strength in Textron Aviation through the year encouraged management to raise its full-year earnings and cash flow expectations in every quarter in 2021.
Moreover, there are three reasons why Textron can have another strong year in 2022. First, the COVID-19 pandemic resurgence is putting more pressure on commercial aviation, and that's something likely to encourage more spending on business jets. That's excellent news for Textron's Cessna business jets.
Second, Textron Systems (military hardware, robotic land vehicles, general aviation engines, air support to the U.S. military) took a hit in 2021 from the U.S. Army's withdrawal from Afghanistan. That should create an easier hurdle for the business to overcome in 2022.
Third, Textron's industrial segment generates 55% to 60% of its revenue from fuel systems and functional components businesses, which should benefit from an increase in vehicle production in 2022 as the industry recovers from the semiconductor shortage that limited production in 2021.
All told, Textron is set for another excellent year in 2022. Trading on just 17 times its expected free cash flow in 2021, the stock remains a good value.
A growth stock to get charged up about
Scott Levine (Wallbox): Granted, Wallbox doesn't have a long trading history in 2021. The stock went public after merging with a special-purpose acquisition company (SPAC) in October. The electric vehicle-charging stock provided electric returns for investors during its time on the market. From its debut on the public markets on Oct. 4 through the end of the year, shares of Wallbox skyrocketed more than 102%. And while it's clear that plenty of bulls plugged into Wallbox last year, there's reason to believe that this under-the-radar play has additional room to run in 2022.
There's no argument that EV makers have received the lion's share of attention over the past couple of years, but the importance of EV chargers can't be overlooked. In business since 2015, Wallbox is already experiencing steep growth in its EV charging offerings. For example, the company has reported revenue of $55 million through the first three quarters of 2021, representing over 280% growth over the same period in 2020. Should the company achieve its sales forecast for the final quarter of the year and report $24 million on the top line, it will result in the company booking revenue of $79 million, or a 230% increase over the $24 million that it reported in 2020.
Although Wallbox has a stronger presence in Europe, the company is making inroads in the U.S. market, representing another significant avenue of growth. In the third quarter of 2021, Wallbox announced the development of a 120,000 square foot manufacturing facility in Texas. Management expects production at the Lone Star State facility to begin in the second half of 2022 and eventually achieve annual manufacturing capacity of 290,000 and 500,000 by 2027 and 2030, respectfully.
Should the company proceed with the development of its manufacturing facility on schedule (and on budget) as well as achieve its revenue projections, it's likely that the market will sit up and take notice.
