Despite recent volatility, Wall Street and investors have enjoyed a record-breaking run. The benchmark S&P 500 took less than 17 months to double off of its coronavirus pandemic lows set in March 2020, and the index logged nearly six dozen record-closing highs last year.
And yet even with the broader market regularly knocking on the door of new highs, bargains can still be found. If you're looking for a way to potentially get richer to begin 2022, and more importantly aiming to build wealth over time, the following three top stocks can make that happen.
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Novavax
The first top stock that could make you richer in January and well beyond is biotech stock Novavax (NVAX -0.95%).
Novavax is one of a broad sea of drug developers that's gained notoriety from tackling the coronavirus disease 2019 (COVID-19). The company's vaccine, NVX-CoV2373, was tested in two large-scale studies in the U.K. and U.S./Mexico. The U.K. trial, reported in March, led to a vaccine efficacy (VE) of 89.7%, while the June-announced trial data from the U.S./Mexico study demonstrated a 90.4% VE.
For some context, only three vaccines have reached the 90% VE level: The Pfizer/BioNTech vaccine (Comirnaty), the Moderna vaccine (mRNA-1273), and Novavax's NVX-CoV2373. Although VE is one of many measures of success looked at when determining the efficacy of a vaccine, a roughly-90% VE could be a strong enough data point to allow Novavax to vault ahead of other vaccine players, such as AstraZeneca and Johnson & Johnson.
What makes Novavax such an intriguing value is that last year's short-term miscues have brought its share price way down. These "miscues" involve the company delaying emergency-use authorization (EUA) filings in a number of key markets, as well as navigating its way through vaccine production concerns. Though EUA filing delays and vaccine manufacturing concerns are less than ideal, the company looks to be moving beyond these worries. A handful of countries (India, Indonesia, and the Philippines) have already granted Novavax the equivalent of an EUA, and the company has filed for EUA approval in a number of other high-dollar markets.
Something else to consider with Novavax is that its revenue stream will likely be recurring. The mutability of the SARS-CoV-2 virus that causes COVID-19 suggests it'll become an endemic disease. This would give Novavax an opportunity to be a leader in both initial inoculations and booster shots.
Furthermore, the company is also developing combination vaccines for COVID-19 and influenza. Though it's not the only drugmaker working on COVID-19 combo vaccines, Novavax's development platform could allow it to beat most of its rivals to market.
If Wall Street's consensus for 2022 proves accurate, Novavax can be had for around two times sales and a multiple of five times forecasted earnings per share.
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Annaly Capital Management
It's no secret that growth stocks have been all the rage on Wall Street since the Great Recession ended more than 12 years ago. But in an inflationary environment where the Federal Reserve is beginning to turn hawkish, value and income stocks can make a lot of sense. That's why Annaly Capital Management (NLY -0.32%) is a top stock that can make investors richer in January and beyond.
Annaly Capital Management is a mortgage real estate investment trust (REIT). In simple terms, Annaly borrows money at low short-term lending rates and uses this capital to acquire assets that offer higher yields over the long run, such as mortgage-backed securities (MBS). The company is simply trying to maximize its net interest margin, which is the difference between the average yield of its asset portfolio minus its average borrowing rate.
One of the best things about the mortgage REIT industry is that it's highly transparent and relatively predictable. It's an industry that tends to be very sensitive to interest rates. Though rising rates can negatively impact short-term borrowing rates, what's more important for Annaly is that the nation's central bank clearly outlines its intentions and slow-steps its moves. When the Fed takes slow and decisive steps, Annaly has an opportunity to make adjustments to its asset portfolio in order to maximize its profit potential.
Additionally, economic recoveries tend to be quite favorable for the mortgage REIT industry. Dating back six decades, it's not uncommon to see the interest rate yield curve steepen during a recovery. By "steepen," I mean the yields between short-and-long-term Treasury bonds widen. When this happens, Annaly typically sees its net interest margin expand.
Annaly also focusses on buying agency assets. An "agency" security is one that's backed by the federal government in the event of a default. As you might have guessed, this added protection means lower yields relative to non-agency assets. However, with less risk, Annaly is able to use leverage to its advantage to increase its profit potential.
With Annaly trading below its book value and parsing out an inflation-crushing and sustainable 11% yield, it's a stock that can help investors steadily grow their wealth.
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Teladoc Health
A third top stock that can make investors richer in January and well beyond is leading telehealth services provider Teladoc Health (TDOC -0.07%).
Despite catapulting higher during the initial stages of the pandemic, Teladoc's shares have been clobbered over the past 11 months. Looking back two years, shares are essentially flat. But this stumble represents the perfect opportunity for patient investors to buy into an industry game-changer.
Teladoc isn't just a "COVID-19 play," as evidenced by the company's sales growth prior to the pandemic. In the six years leading up to the pandemic, Teladoc averaged annual sales growth of 74%. That's not a fluke. This growth is indicative of a changing personalized care landscape that Teladoc is spearheading.
The virtual visit platform Teladoc Health offers provides benefits for all parties throughout the healthcare treatment chain. Being able to speak with physicians from the comfort of one's home is convenient for patients. Meanwhile, the ease-of-use of virtual visits allows physicians to keep closer tabs on chronically ill patients. This could mean something as simple as speaking with patients regularly, or having them upload relevant medical data on a set basis. This ease of interaction should help improve patient outcomes and lower out-of-pocket costs for health insurance companies. In other words, insurers should be promoting virtual visit use whenever possible.
The Teladoc growth story is just as much about applied health signals company Livongo Health, which Teladoc acquired during the fourth quarter of 2020. Although higher costs associated with this purchase are a reason the company's losses were higher than expected last year (and a drag on its share price), those one-time costs will move to the back seat in 2022.
Livongo leans on artificial intelligence to send tips and nudges to its subscribers with chronic illnesses to encourage behavior changes so they'll lead healthier lives. While Livongo has predominantly focused on patients with diabetes, it'll be targeting people with hypertension and weight management issues as well. These indications cover a significant percentage of adults in the U.S., thus giving Livongo plenty of opportunity to grow its subscriber base.
Teladoc has an opportunity to be one of the fastest-growing companies this decade in the personalized-care space, which is what makes it such a smart buy.
