BMO's investment chief sees a 17 per cent stock market gain for 2022 -- here are 3 'outperform' stocks

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There’s no shortage of prominent investors saying the stock market is in for a correction in the coming months.

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BMO's investment chief sees a 17 per cent stock market gain for 2022 -- here are 3 'outperform' stocks Back to video

With inflation at a 30-year high and a number of companies carrying share prices that could be considered unrealistic, the anxiety makes sense.

But what if the doom-and-gloom crowd is wrong?

Brian Belski, BMO Capital Markets chief investment strategist, says the S&P 500 could be sitting at around 5,300 by the end of 2022 — a 17-per-cent rise from current levels.

Belski doesn’t see inflation as a long-term problem to strategize around. He believes robust company earnings and support by the Federal Reserve will keep the market rolling.

“The fundamental construct of the United States stock market is in wonderful condition,” Belski told Business Insider .

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Here are three stocks BMO expects to outperform a healthy market next year. If you need to launch an investing account, you can do that for as little as $1 .

1. Pfizer (PFE)

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It was just last week that BMO Capital initiated an “outperform” rating for pharmaceutical giant Pfizer, signalling that the company could outdo many competitors next year.

Pfizer’s share price is hovering around US$53. BMO has projected it to hit US$60.

Pfizer’s vaccine business is the obvious draw here, with COVID-generated revenue likely to continue rolling in over the next year. But the company’s solid financials and pipeline of new products should help it maintain the momentum it has built this year.

Pfizer just wrapped up a wild third quarter that saw revenues hit US$24.1 billion — 134 per cent higher than during the same period last year.

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Year-to-date, Pfizer stock has risen 44 per cent.

2. Palo Alto Networks (PANW)

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BMO already bestowed an “outperform” rating on Palo Alto Networks after the cybersecurity firm released its Q1 earnings. Not only does that rating still hold, but BMO recently raised its price target for the company from US$560 to US$615.

Everything seems to be trending in the right direction for the company.

Its Q3 revenue beat analyst expectations by about US$50 million and was 28 per cent higher year over year. Inflation has allowed Palo Alto to increase prices, and the steady growth of the cloud computing space means an increasing number of businesses should require its technology.

Palo Alto Networks is projecting revenue of around US$5.3 billion for 2022. That rosy outlook has helped lift the company’s share price by about 48 per cent since Aug. 23.

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3. Alphabet (GOOGL)

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Similar to Palo Alto Networks, BMO had already identified Alphabet, Google’s parent company, as an “outperform” candidate prior to the release of its third-quarter earnings report. BMO then swiftly upped its target price for Alphabet from US$3,000 to US$3,200 per share.

Alphabet’s Q3 performance was predictably colossal. The US$18.9 billion in profit marked the company’s fifth record-breaking quarter in a row. The revenue brought in during the third quarter, $65.1 billion, was almost $19 billion higher than in the same period last year.

Revenue from search and YouTube advertising continues to rise, as does the cash coming in from Google Cloud. Alphabet makes it difficult for investors to know how its Pixel phones and Android operating system are faring among consumers, but when your profits are increasing by 69 per cent year over year, there’s not much reason to nitpick.

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Even if the market grows, this investment might grow faster

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No one really knows if the stock market is going to continue barreling ahead. It could run out of steam tomorrow.

Either way, now might be the time to consider diversifying your portfolio with real assets, which can insulate you from market turmoil and inflation.

One of those assets taking up increasing space in modern portfolios is contemporary art , which has outperformed the S&P 500 almost every year since 1995.

You don’t need millions of dollars to invest in rapidly appreciating works by artists like Banksy, Andy Warhol or Jean-Michel Basquiat, whose never-seen-before painting owned by rapper Jay-Z was the backdrop of his recent Tiffany & Co. ad with Beyonce.

A popular new app allows you to purchase shares in a variety of masterpieces for a fraction of the cost.

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