10 Overlooked Stocks to Consider in 2022

2021 is nearly in the books, and it’s been a banner year for stocks. As of Nov. 17, the S&P 500 is up 29% for the year, and it shows little signs of slowing down despite high inflation and signs the Federal Reserve could soon start taking steps to cool off the economy.

For investors, 2022 may be a more challenging year than 2021, as already a number of top growth stocks are pulling back, a sign the market is wary of overstretched valuations. That means it’s a good idea to invest in stocks that are trading at more reasonable valuations, especially those that still have solid growth prospects.

Keep reading to see 10 overlooked stocks worth considering in 2022.

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Auto parts sales soared during the pandemic as the industry benefited from a number of tailwinds including enhanced unemployment, stimulus checks, and an interest in do-it-yourself auto projects during a time of social distancing.

Shares of CarParts.com (NASDAQ: PRTS), which also benefited from e-commerce tailwinds, boomed in 2020, but the stock has cooled off since a surge earlier this year and is now down 36% from the high it reached in February.

However, the e-commerce stock has a lot of tailwinds in its favor, including excess demand, factory expansions coming on line early next year, and further penetration in mechanical parts -- a much bigger category than the replacement body parts its business has historically focused on.

The company is also targeting long-term revenue growth of 20% to 25% annually and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins of 8% to 10%. If it can deliver solid growth next year, it should be rewarded by Mr. Market.

ALSO READ: 5 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030

Stitch Fix (NASDAQ: SFIX) stock has been hammered this year as the market has seemed skeptical of the company’s launch of a curated shopping site, which it calls Stitch Fix Freestyle, and new CEO Elizabeth Spaulding.

However, the business continues to put up solid growth, growing revenue by roughly 20% annually, and still has disruptive potential in the apparel sector.

Stitch Fix Freestyle will be the key catalyst to watch next year as it could power the stock to outsize growth if it resonates with investors.

Even if it doesn’t, growth in the core business should help lift the stock off of 52-week lows, where it’s currently treading, giving it a good chance of outperforming the market next year.

Perion Network (NASDAQ: PERI), an ad tech company, has been no slouch this year as the shift to digital advertising has driven strong growth in 2020 and 2021. However, the growth story still seems underappreciated. Perion has differentiated itself from other players in the space with a focus on connecting ad publishers with buyers through its intelligent hub and offering a premium ad experience for end users with features like QR codes in connected TV.

Despite its rapid growth, the stock still trades at a modest price-to-earnings ratio of 20. If it can maintain its current momentum, that valuation should help power the stock higher next year.

The Children’s Place (NASDAQ: PLCE) is an afterthought for most investors, but the children’s apparel retailer looks like a classic under-the-radar value stock at the moment.

The company shattered analyst estimates in the first half of the year as it recovered quickly from the pandemic thanks to its store rationalization program and pivot to e-commerce.

Nearly half of the company’s sales now come from the digital channel, better than nearly any other brick-and-mortar apparel retailer. However, the stock is still being priced like a dying retailer, trading at a price-to-earnings of less than 10. That seems like a mismatch and one that investors can take advantage of going into 2022.

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Chinese stocks have mostly suffered this year amid a government crackdown on a number of tech stocks as Beijing pushes back against tech monopolies, advocates for the consumer, and seeks to mitigate income inequality.

JD.com (NASDAQ: JD), China’s biggest direct retailer, has been mostly unscathed by tightening regulations. And it looks poised for continued growth into next year as it invests in automated warehouses and delivery systems, builds out its logistics network, and expands further into online pharmacy and supermarkets.

China is the world’s biggest retail and e-commerce market, and that means there’s still a long runway of growth ahead for JD.com.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Axon Enterprise (NASDAQ: AXON) is a unique company. It makes Taser electrical stun guns and body cameras. It also offers a database for law enforcement called Evidence.com, as well as cloud-based software called Axon Cloud Services to do things like facilitate data sharing and transcribe body camera video.

The stock has been a strong performer over its history, but it doesn’t get the attention of many other tech stocks.

The company just upgraded its addressable market from $27 billion to $52 billion as it sees opportunities to sell Tasers in the consumer market, and with justice software, including assisting prosecutors and defense attorneys in the discovery process.

With an expanding market to tackle, 2022 could be a promising year for Axon.

Pet stocks thrived during the early months of the pandemic, and pet adoptions spiked as Americans looked to furry friends to keep them company during a tough time.

Petco (NASDAQ: WOOF), one of the biggest pet products retailers, has been mostly ignored since its IPO earlier this year, but it deserves a closer look.

The company is transitioning from brick-and-mortar retail to being a one-stop shop for pet products and services like grooming, veterinary care, and insurance. It’s also selling memberships, helping it build an Amazon Prime-like business model.

As the pet market continues to expand, Petco looks well positioned to capitalize on the growth opportunity.

ALSO READ: 3 Stocks That Are Fantastic Deals Right Now

With little fanfare, IAC/InterActiveCorp (NASDAQ: IAC) has been one of the best-performing stocks of the past 25 years. The company has spun off winners like Expedia; Ticketmaster, which is now Live Nation Entertainment; and Match Group, the leading online dating company.

After spinning off Vimeo earlier this year, the company is flush with cash and ready to make new acquisitions. It recently spent $2.7 billion to acquire Meredith, the publisher of titles like People and Allrecipes, which should fit in well with Dotdash, its online publishing arm.

IAC, which is the majority owner of companies like Angi and Care.com, has a long history of success in two-sided marketplaces, and it could take advantage of a volatile market.

The semiconductor sector continues to be under pressure due to the global chip shortage, and that should favor ACM Research (NASDAQ: ACMR), a picks-and-shovels play in semiconductors.

ACM is an American company operating in China that makes precision wafer-cleaning machines, using patented technology that gives it an advantage over traditional wafer-cleaning processes.

The company is growing quickly, solidly profitable, and poised to benefit from rising prices in the semiconductor industry.

Innovative Industrial Properties (NYSE: IIPR) offers a unique way to get exposure to the cannabis sector.

The company isn’t a marijuana grower but a landlord, as it owns growhouses that growers rent. That provides the company with a level of stability that’s hard to find in the industry, as it insulates it from volatile prices and other uncertainties.

IIP is also growing fast with revenue up 57%, and 2022 could be a favorable year for the stock as there are signs that the federal government may take steps to decriminalize marijuana.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

With stocks having soared over the past five years and the threat of tightening monetary policy around the corner, 2022 could bring a shift in market conditions, cooling off the dramatic gains in a number of growth stocks.

It’s worth taking a closer look at some of these overlooked stocks, which may have fallen out of fashion or are underappreciated by investors. A change in market sentiment could be just what they need.

Jeremy Bowman owns shares of ACM Research, Inc, ANGI Homeservices Inc., Axon Enterprise, CarParts.com, Inc., JD.com, Perion Network, Stitch Fix, and The Children’s Place. The Motley Fool owns shares of and recommends Axon Enterprise, Innovative Industrial Properties, JD.com, Match Group, and Stitch Fix. The Motley Fool recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.