While some investors are worried about the next market crash, others are taking advantage of this fact: if you have the cash on hand, it's a great time to add more high-conviction stocks to your portfolio right now, and often at discounted valuations.
In this segment of Backstage Pass, recorded on Jan. 5, Fool contributors Rachel Warren, Jason Hall, Trevor Jennewine, and Jamie Louko discuss their top stock picks to buy and hold in 2022 and beyond.
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Rachel Warren: I don't think any of us can predict where the bottom is. I think we're going to be seeing a lot of ups and downs in the market. You also have a lot more investors that are retail investors that are prone toward more speculative assets now than they had been in times past, and that is also driving some of that volatility.
One other question from Vihaan touches about what we're talking before, "Five team, what are three gold stocks from each of you, you would add or take a position in as you see 5% dip every day, especially tech portfolios?"
So top stocks to pick this year. I know for me personally, Airbnb (ABNB 1.03%) is a stock I talked about the other day on our Jan. 3 special. That's one that's definitely one I want to add to my portfolio this year. Shopify (SHOP 1.26%) is one I already own and would like to buy more of and Apple (AAPL 0.51%). You guys have anything you want to add to that?
Jason Hall: I going to do it a little differently and I'm going to give out two stocks that are very different stocks that I think are worth taking a look at. I would start, if you're looking for, I think just a great tech stock that's actually not as an insurance company, but just a stock that we associate with tech, that to me just looks incredibly cheap, and that's Lemonade (LMND 1.89%).
It's trading for less than 2.5 times book value right now. When you think about insurance companies, that's how you want to value them, is book value. The insurance assets that they own. This is a company that's, they're just now getting into auto insurance.
Their book value per share is going to skyrocket over the next two years. I'd say start with Lemonade is one that I love.
Then I would say if you're looking for some balance, but you're also looking for a stock that can crush the market, look at Store Capital (STOR), ticker STOR, dividend yields well over 4%.
They own tons of stand-alone real estate for like, think about restaurants, think about experiential retail, some brick-and-mortar like regular retail, but a lot of experiential stuff too.
It's just a really great business, great assets. They have a long history growing that dividend and the market is just really undervaluing it right now, so there's two.
Warren: Awesome. Trevor.
Trevor Jennewine: I like both of those picks, I think especially Lemonade there. I think ProShopGuy mentioned the Jan. 3 special, so there's a lot more picks there.
I'm going to go with, like Rachel said, Shopify and MercadoLibre (MELI 0.87%). I think they both have a strong competitive position, big market opportunity. Those are two at the top of my list right now.
Warren: Great. Jamie, you have any thoughts?
Jamie Louko: I think we got the same portfolio or something, man [laughs] because I was just looking through my top 10 holdings and I saw Shopify, I saw MercadoLibre and I was like, that's it. Two, and that's it, so you're putting me on my feet here.
But if you want to stick in tech, two holdings that I really, really like are Datadog (DDOG 1.65%) and Cloudflare (NET 0.70%). Datadog is an observability platform that allows companies to monitor performance of their applications and software. Both have massive total addressable markets.
Both have really visionary leaders that are doing a lot and both are really well-loved in the Fool universe.
But if you're looking for more, a stable company, when I look for stable companies, I really look for some nice, strong consumer goods companies with really robust pricing power and brand recognition, and two that stand out to me are Costco (COST 0.84%) and Domino's (DPZ -0.48%). Those are my first and third biggest holdings. That's it. Those two.
Warren: Thank you, guys.
