Sector Themes In Play In The Markets For 2022

Years like 2021 saw a solid broad-based performance in many stock market sectors. Relatively simple approaches such as Indexing and Sector Rotation did well. But with macro changes in play and many uncertainties for 2022, we may very well see broad indexes underperforming while individual sectors dominated by a few stocks really shine.

Dips will continue to be bought unless something significant changes. But let’s not forget that we’re long overdue for a substantial correction. Significant risk catalysts are:

  • Fed actions.
  • International conflicts (i.e., Russia and China).
  • Pandemic developments that are not currently known.

There’s always the risk of the unknown – the literal definition of a “Black Swan” event. We shouldn’t get too complacent, knowing that we may need to get defensive to protect capital suddenly. When it’s time to be defensive, let’s not forget that CASH IS A POSITION!

Sector theme DRIVERS FOR 2022

Many uncertainties about Covid and the lingering effects on the economy remain. Inflation has roared back to 30-year highs. Strong employment numbers and consumer spending are fueling significant growth in corporate earnings. We also have a shift in bias at the Fed on interest rates and quantitative easing. These are the “knowns” and are theoretically priced in.

For these reasons and more, we should expect more of a “Stockpicker’s Market” in 2022. Certain sectors will do well and weather corrections better than the broader markets.

Even short-term traders can gain an edge by paying attention to what sectors are strongest. Traders tend to benefit most from playing the strongest stocks in the strongest sectors for bullish trades and choosing the weakest stocks in weaker sectors for bearish trades. That “tailwind” can make a significant difference in results.

Let’s look at some sector themes and individual names to keep an eye on in 2022.

ECONOMIC NORMALIZATION

A long-anticipated return to a “normal” economy will continue to be a theme — we just don’t know if that will be Post-Covid or Co-Covid. Or when. Air travel, theme parks, hotels, cruise lines, etc., have all suffered in the persistent Pandemic. What does seem to be changing is the idea of a “new normal” where virus variants may be with us for years to come. We will adjust socially and economically to that for the foreseeable future. DAL, UAL, LUV, AAL are airlines to watch, and the JETS ETF may be a good way to play a general recovery in this sector.

5G INTERNET

The much-hyped rollout of 5G network technology had its share of setbacks and technology disappointments. But 2022 should see the 5G deployment start to take off as technical issues are worked out, and the promise of widespread coverage with transformational performance becomes real. In the background supplying the 5G infrastructure are AMD, QCOM, ADI, MRVL, AMT, XLNX, and KEYS. Along with infrastructure and testing companies, shares of major carriers T, TMUS, and VZ languished for much of the second half of 2021 and looked poised for recovery in the coming year.

ARTIFICIAL INTELLIGENCE

In all its various forms (including autonomous vehicles), AI will remain a developing trend. Big players in the space to watch include MSFT, AMAT, GOOGL, NVDA, AAPL, and QCOM.

EVs and AUTONOMOUS VEHICLES

Electric Vehicles (EVs) are nearing an inflection point where widespread adoption is poised to take off. Technology and cost competitiveness has improved where some EVs will reach price parity with their traditional internal combustion counterparts.

While there are many smaller players in the EV space, automotive stalwarts F, GM, and TM are investing very heavily. TSLA has been grabbing the headlines, but many others want to stake out their territory in the space, including whole tiers of manufacturers and infrastructure enablers like WKHS, XPEV, NKLA, and CHPT.

MATERIALS and MINING

Gold, silver, and related miners underperformed for much of 2021 and now look poised for a recovery year as inflation, and monetary concerns grow. GLD, SLV, GDX, GDXJ, SIL, SILJ look good as both longer and mid-term plays. Metals and miners may get hit initially with a significant downturn in stocks but could ultimately demonstrate their safe-haven potential.

Specific to the growth in EVs, battery technology, etc., copper, lithium, and related basic materials should see stronger demand ahead. FCX looks particularly interesting as a dual play on gold and copper. LIT may be a good ETF play on lithium battery technology.

SEMICONDUCTORS

The market for chips is primed for exponential growth. EV’s have about ten times the number of specialty semiconductors as conventional vehicles. AI, crypto, 5G, mobile devices, and ubiquitous computing should drive growth in the semiconductor sector for some time to come.

REAL ESTATE

Real Estate and Homebuilders should continue to do well while employment numbers remain strong and if interest rates don’t rise too quickly. The inventory shortage in most real estate markets will likely persist well into the new year.

Storage REITs like PSA, LSI, and CUBE have been big winners in the Covid economy and still have room to run.

SUMMARY

Many sectors still look bullish after gains in 2021. But there are “storm clouds” on the horizon, and we must not take future performance for granted.

Lastly, one of the simplest ways to assess how sectors are measuring up is to watch the charts for the S&P SPDR series sector ETFs and a few others. Here are some notable ones to watch:

https://www.thetechnicaltraders.com/wp-content/uploads/2021/12/Dec-31-article.png

These can give us a good starting place to look for leading stocks in winning sectors as the year unfolds.

Let’s remain vigilant for possible market corrections and may the wind be at our backs!

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Best Growth Stocks November 2021

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are FB, SWKS, LOGI, LULU, & MRVL.

For MAPsignals, we believe that Big Money trading can alert you to the forward fundamental picture of a stock. We want the odds on our side when looking for the highest quality stocks.

Up first is Facebook, Inc. (FB), which is the social media leader.

Great companies on pullbacks are worthy of attention. Check out FB:

  • 1 month performance (-4.42%)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals Facebook has made the past few years.

Blue bars are showing that FB was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Facebook’s revenue numbers have been strong:

  • 3-year sales growth rate (+28.5%)
  • 3-year earnings growth rate (+27.3%)

Next up is Skyworks Solutions, Inc. (SWKS), which is a leading semiconductor firm.

Check out these technicals for SWKS:

  • 1 month performance (-3.34%)
  • Historical big money signals

Let’s look long-term. These are the top buy signals Skyworks has made since 2015. Clearly the Big Money has been consistent for years:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Skyworks has had stagnant growth. I see that changing in the years to come:

  • 3-year sales growth rate = -2.46%
  • 3-year earnings growth rate = -4.05%

Another growth name is Logitech International S.A. (LOGI), which is a leading camera maker.

Strong candidates for growth usually have big money buying the shares. Logitech has that. Also, the stock has pulled back recently:

  • 1 month performance (-4.79%)
  • Historical Big Money signals

Below are the big money signals Logitech has made since 2015. That’s juice!

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now let’s look under the hood. Logitech’s sales growth is impressive. I expect more growth in the coming years:

  • 3-year sales growth rate = +30.6%
  • 3-year earnings growth rate = +68.1%

Number 4 on the list is Lululemon Athletica Inc. (LULU), which is a leading fitness wear company.

Here are the technicals important to me:

  • 1 month performance (-.69%)
  • Historical big money signals

Below are the big money signals for LULU since 2015:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. Lululemon has been growing nicely:

  • 3-year sales growth rate = +18.58%
  • 3-year earnings growth rate = +39.56%

Our last growth candidate is Marvell Technology Group Ltd. (MRVL), which is another leading semiconductor firm.

Check out these technicals:

  • YTD performance (+11.92%)
  • Historical big money signals

Marvell is a high-quality stock since it’s made my Top 20 report:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now look under the hood. Earnings hasn’t been growing, but I expect that to change going forward:

  • 3-year sales growth rate = +7.7%
  • 3-year earnings growth rate = -126.1%

The Bottom Line

FB, SWKS, LOGI, LULU, & MRVL represent top growth stocks for November 2021. Strong fundamentals and big money buy signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in SWKS & LULU in personal accounts and long positions in SWKS, LOGI, & LULU in managed accounts.

Investment Research Disclaimer

Marvell Stock Attracts Big Money

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Marvell has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares for all year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals MRVL has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Chart, histogramDescription automatically generated
Source: www.mapsignals.com

In 2021, the stock has attracted 18 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

  • YTD outperformance vs. VanEck Vectors Semiconductor ETF (+19.73% vs. SMH)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Marvell has been growing sales nicely. Take a look:

  • 3-year sales growth rate (+7.71%)
  • 3-year earnings growth rate (-126.13%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, MRVL has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

MRVL has a lot of qualities that are attracting Big Money. And since 2015, it’s made this list 4 times, with its first appearance on 2/7/2017… and gaining 330% since. The blue bars below show the times that Marvell was a top pick:

Chart, histogramDescription automatically generated
Source: www.mapsignals.com

It’s been a top stock in the semiconductor sector according to the MAPsignals process. I wouldn’t be surprised if MRVL makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The Marvell rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in MRVL at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer