2022 Outlook Series

Livewire readers’ most-tipped global stocks for 2022

Glenn Freeman

Livewire Markets

There’s a curious phenomenon I've noticed in this list: it doesn’t change much from year to year. My colleagues Patrick Poke and Ally Selby, who have compiled this year’s Readers' most-tipped lists for Australian large caps and small caps, note there is far more turnover in theirs. Only one of the small caps on this year’s list is repeated from last year, while there were five newcomers in the large-caps top ten list.

(The picks that comprise the large caps, small caps, and global stocks most-tipped lists are derived from the annual Livewire reader survey: you can read a report of the 2022 results here.)

The companies that continue to dominate the global stocks list are some of the world's biggest, which comprise around half of the total vote count. It seems something like the home-market investor bias we often hear about. Perhaps in global stocks, Australian investors simply gravitate towards those that get the most focus from local media outlets.

Scrolling through the names, something else prompted me to check back over last year’s version (the first time we’ve included global stocks in this survey). This is the first time a cryptocurrency stock has made its way onto the list, Coinbase sitting in 15th position.

In the following wire, I count down the top 10 global companies for 2022, as nominated by Livewire readers.

Oh and before launching into the names: By publishing this list, we are sharing information from the Livewire readership, and we hope it inspires ideas for further research. This information is not, nor is it intended to be, a set of recommendations. Please do your own research and seek advice from a professional.

The #10 global stock: ASML Holding (NASDAQ: ASML)

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ASML is one of two chipmakers on the list this year. It provides lithography machines that enable transistors and microchips to be created from silicone.

The Dutch firm has seen its share price rise more than five-fold over the last half-decade, with a market cap north of US$300 billion.

ETF Securities’ Kanish Chugh recently described it for Livewire as, “one of the biggest and most successful companies that no one's ever heard of.”

The #9 global stock: BHP Group (NYSE: BHP)

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A mining giant commonly known as “the big Australian”, not much needs to be said about BHP - which makes this list thanks to its dual listing on the ASX and the NYSE. Suffice to say that, since it was founded 135 years ago as the Broken Hill Proprietary Company, it has gone through plenty of change. In 2016 BHP spun out its oil and gas assets into a separately listed entity, South32 (ASX: S32). This followed two years after the company de-merged its steelmaking operations to form BlueScope.

These were big deals for the company, as is the latest major announcement that landed late last year with the announcement that Woodside Petroleum would acquire BHP Petroleum. The $40 billion deal was approved by the regulator last month.

In September, Duncan Simmonds of Wavestone Capital wrote that the “unification proposal has had the greatest impact on the BHP share price performance so far.”

And a month earlier, Market Matters’ James Gerrish provided his view:

“The continued portfolio streamlining, the clunky corporate structure unbundling and the pivot to future-facing commodities (potash) looks sensible, strategic and logical to us,” he said.

“Slowing global growth will invariably be a headwind for the sector and by extension BHP but we believe there is now fresh news to keep a net positive focus on BHP. Importantly, the stock will become less of a “sell” for fund managers moving to an ESG focused mandate.”

The #8 global stock: Block (NYSE: SQ)

The Jack Dorsey-founded company Block (then known as Square) was at the centre of Australia’s biggest corporate deal of 2021, with its $39 billion acquisition of Afterpay (ASX: APT). Block, a payments technology firm, scooped up Afterpay to supercharge its platform of buyers and sellers.

With a market cap of more than US$60 billion, Block’s share price has risen around 860% in the last five years.

Following the transaction, which is set to be finalised in the first quarter this year, Square will also have a secondary listing on the ASX (its primary listing is on the NASDAQ).

Of course, the deal attracted plenty of attention locally, and our own Ally Selby provided a wrap of the story. This included a perspective from Lakehouse Capital’s Joe Magyer.

“I think the deal validates that BNPL is here to stay. But if I was a smaller rival, I wouldn’t necessarily be thrilled to hear this news,” he said.

“Square’s sticking its neck out this far validates that Afterpay was the clear BNPL leader, no doubt to the disappointment of Zip (ASX: Z1P), Affirm, Sezzle (ASX: SZL), and the myriad also-rans that have popped up.”

The #7 global stock: Nvidia (NASDAQ: NVDA)

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A US-based multinational technology firm, Nvidia designs graphics processing units for applications in the gaming and professional markets.

One of just two new entrants to the top 10 global stocks list this year, the chipmaker has struggled amid the semiconductor shortages that have knocked numerous industries since 2020. These were driven by several factors, including massive demand for electronic goods spurred by COVID at the same time as droughts, fires and snowstorms hit major production hubs in Taiwan, Japan and the US. Nvidia and many other chipmakers that outsource their production have struggled to fill orders over this time.

Nvidia shareholders seem to have largely “looked through” these effects and the share price has held up, though the price has dipped since last November.

And despite the difficult period it has endured – which is starting to improve as chip shortages unwind – there is strong optimism over the longer term. In a discussion of the Metaverse theme – think artificial intelligence, machine learning and virtual reality – Mason Stevens’ Mike Young recently included Nvidia on a list of companies he expects to benefit.

The #6 global stock: Alibaba (NASDAQ: BABA)

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Chinese e-commerce and technology conglomerate Alibaba may have slipped down the rankings slightly this year, but it certainly hasn’t disappeared (unlike its outspoken founder and former CEO Jack Ma after he criticised the CCP).

The firm ranked sixth in our list this year, down from four last year. Its shares have also dipped, falling more than 40% since last January.

But Alibaba remains one of China’s largest tech companies and is still on the “buy” list for many investors – and not just Livewire readers.

Magellan Financial Group co-founder Hamish Douglass outlined for us last January why he regarded Alibaba as “fundamentally undervalued”.

Michael Frazis of Frazis Capital in August also discussed why the company’s negative press and rocky relationship with the CCP wasn’t bad news for investors.

The #5 global stock: Alphabet (NASDAQ: GOOGL)

Chart provided by Sharesight

The parent company of the well-known tech firm Google, which made its name in web search back in 1998 but has since expanded into multiple areas, has grown its share price by more than 230% over the last five years. With a market cap of US$1.8 trillion, it joined the one-trillion-dollar club in January 2020 (alongside Apple, Microsoft, Facebook and a few others).

In what’s possibly the ultimate test of an investor’s conviction in a company, Forager FundsSteve Johnson reckons he’d do “okay” putting all his wealth into Alphabet for five years.

Explaining last February why he believes the firm is more like an infrastructure company than many people realise, Johnson said:

"It almost doesn’t matter whether it’s through their search engine anymore, or through someone else’s website, they’re taking a clip off the ticket.

"I just think there are so many fingers in so many pies and – best of all it’s trading at a very sensible price."

The #4 global stock: Apple (NASDAQ: AAPL)

Chart provided by Sharesight

If you thought the passing of co-founder Steve Jobs in 2011 would mark a decline in Apple’s fortunes, you were sorely mistaken. Since that time, the company became the first to achieve a US$1 trillion market cap, sailing past this milestone in August 2018. And Apple has delivered a share price return of around 1000% and 400% over 10 years and five years.

It’s not only our readers tipping the company to continue growing its share price in 2021.

In September, soon after Apple got some bad news in an important court ruling on how its App Store operates, Kauri Asset Management’s Michael Smith wrote:

While Apple’s outlook did include a slightly more clouded view, driven by the global semiconductor shortage that has hampered producers of electronic goods, the stock has continued to prove a formidable name as investors look forward to growth from a series of catalysts on the horizon."

The #3 global stock: Microsoft (NASDAQ: MSFT)

Chart provided by Sharesight

Proof that it’s not only flashy new firms who can dominate global tech, the firm founded by Bill Gates back in 1975 is just a few years short of its half-century but is still innovating, with much of the focus in recent years turned to Microsoft’s cloud business, Azure.

Over the last five years, Microsoft’s share price has grown more than 400%. And its market cap currently sits above US$2 trillion, having broken through US$1 trillion at the end of March 2019.

High-conviction global fund manager and Livewire partner, Bob Desmond of Claremont Global, singled out Microsoft as the stock he’d own if markets closed for five years – in answer to the closing question Patrick Poke always fires at his Rules of Investing podcast guests.

"In five years, do I still think MSFT is going to be turning on our computers and email? Yep. Still putting all our work in the cloud. Tick. They have a pretty rational CEO who’s made some pretty smart decisions – tick,” said Desmond.

The #2 global stock: Tesla (NASDAQ: TSLA)

Chart provided by Sharesight

The electric vehicle company headed by Elon Musk needs no introduction. It made headlines again in recent days as news broke about a JV struck with Talon Metals, which operates a large nickel mine in partnership with Rio Tinto.

With a market cap that exceeds US$1 trillion, shares in the NASDAQ-listed Tesla have risen more than 2000% over the last five years. All this despite having only posted its first profitable year at the start of 2021, when it reported US$721 million in earnings for calendar 2020.

But it’s clearly not just our readers who think Musk’s creation has plenty of growth ahead. Last October, Tim Davies from Holon Global Investments explained why he regards Tesla shares as undervalued.

The full list

Click on the image below to enlarge...

The #1 most-tipped global stock: Amazon (NASDAQ: AMZN)

Chart provided by Sharesight

And finally, we bring you the top global stock pick of Livewire readers for 2022. Amazon again topped the list this year, as it did in 2021. Amazon delivered a share price return of 13%, making it the second-worst performing FAANG stock of 2021. By comparison, Apple was up 46%, Meta Platforms (the new parent name of Facebook) gained 23% and Netflix rose 11%. And the top dog among big tech, Alphabet, saw its share price increase 73% in 2021.

Rising costs were among the biggest headwinds for Amazon stocks last year. It also faced tough year-on-year comparisons after the big sales bump e-commerce companies got in 2020 when the pandemic hit. But as lockdowns have been wound back and global vaccination rates have soared, growth in Amazon’s sales faded.

Last year, Pengana Capital’s Ted Franks explained why he no longer regards Amazon as a sustainable investment choice.

But the company obviously still has considerable appeal, attracting almost 20% of the votes for the global stock pick of 2022 in our latest reader survey. And many people see a rebound ahead, including analysts from Bank of America Global Research, RBC Capital Markets and Goldman Sachs.

Conclusion

Given this list is composed almost entirely of technology firms - the outlier being BHP - it will be interesting to see how the sector holds up. At the time of writing, tech stocks in the US have been among the biggest losers, prompting renewed calls of a broader sell-off for the sector. This is certainly something we'll be keeping a close eye on during the year.

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Content Editor
Livewire Markets

Glenn Freeman is a content editor at Livewire Markets. He has around 10 years’ experience in financial services writing and editing, most recently with Morningstar Australia. Glenn’s journalistic experience also spans broader areas of business...

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