As 2021 winds down, like many other investors, my focus is on stocks I could buy for 2022. It is with that in mind that I made my top stock picks for 2022.
Generally, the stock market performance in 2021 has been stellar. Most major indices have performed well. And while one can not accurately predict how a particular stock may perform. The current trends for my top stock picks for 2022 suggest to me that they have the potential for explosive returns.
A giant in the Cloud Computing space
For nearly two decades, Microsoft (NASDAQ:MSFT) has grown to become a household name through its signature products. The Windows operating system and Microsoft Office made the company gain dominance in the computing world. With over 70% market share of the operating systems industry, Microsoft has become a behemoth. Even more interesting is the fact that the company is ever-expanding. Over the years, it has added several other businesses to its portfolio, becoming far more diversified.
Recently, Azure, Microsoft’s cloud computing business, has become a massive revenue generator. The cloud computing industry is expected to grow from $445.3bn in 2021 to around $947.3bn by 2026 at a compounded annual growth rate of 16.3%.
My top tech stock pick for 2022 already has a 21% market share of the cloud computing business second to Amazon’s AWS. And if it continues to grow as it has done, that market share is about to get much bigger. This should bring in more revenue and profit for the business.
With further investments into virtual and augmented reality technologies, I believe the Microsoft share price is set to surge in 2022 and beyond. But there is an element of risk. The firm does face off against some fierce competition from the likes of Amazon and Google in the cloud-computing space. Suppose the group is unable to provide a high-quality service at a competitive price. In that case, customers could start flocking to an alternative platform.
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My second top stock pick for 2022: Ford
The changes that have taken place in Ford Motor Company (NYSE:F) haven’t gone unnoticed. At least, not to me. The legacy automaker has gradually transformed itself into a major electric vehicle (EV) producer. And looking at the latest set of results, it seems these efforts are paying off. Management managed to beat revenue and profit expectations throughout 2021, so it’s not surprising to see the stock climb over 120% year-to-date.
Ford’s CEO recently announced that the company plans to increase EV production to 600,000 by 2023. The company aims to be a top producer of EVs in the coming years. Considering the group’s production expansion so far, I think this is an achievable target. And needless to say, that creates a potentially substantial opportunity for my portfolio.
Having said that, the EV stock is somewhat playing catchup. There are plenty of other electric automakers already with an established position that could make it difficult for Ford to penetrate the market.
Final thoughts
While past performance can not guarantee future returns. Microsoft and Ford are my top stock picks for 2022. But they’re not the only top UK stocks I’ve got my eye on.
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Prosper Ambaka owns shares in Ford Motor Company. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets and strategies mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
