What's in Store for 2022?

This past weekend was Barron's 2022 Outlook issue, full of predictions and picks for the year ahead. The top-level takeaways are to expect modest equity returns, negative bond returns, and increased volatility across asset classes next year.

With the stock and bond markets both priced for perfection, equity investors will need to focus next year on quality companies that can control their own fate, irrespective of macroeconomic trends. Fixed-income investors might need to look beyond traditional bonds for decent yields, while investors in commodities and real estate could find attractive inflation hedges.

Read about what to expect from equities, fixed income, commodities, and alternatives here.

Barron's also unveiled our top 10 stock picks for 2022 in last weekend's issue. They include one holdover from last year's list—Berkshire Hathaway—and nine new names from technology, industrials, financials, and more sectors.

One such pick is payments giant Visa. Andrew Bary explains: 

Visa is the juggernaut of the payments business, processing over $13 trillion in transactions during its fiscal year ending in September.

The stock, at about $214, looks appealing after a 15% decline from a 52-week high in July.

Visa trades for about 30 times projected earnings of about $7 a share in its current fiscal year. While not cheap, its multiple looks reasonable, considering its lucrative global duopoly with Mastercard (MA), the shift away from cash, new services, and the prospect of double-digit annual revenue and earnings gains. Merchants may gripe about interchange fees, but Visa remains indispensable.

Visa sees revenue rising in the “high end of midteens” in its current fiscal year, and analysts forecast 20% growth in earnings per share. The company continues to see recovery from depressed pandemic activity.

A greater resumption of international travel will be another big boost to Visa's payment volumes and revenue. Some analysts have price targets on the stock around $280, or more than 30% above current levels.

Johnson & Johnson is another pick, with the  world’s largest healthcare company about to spin off its consumer products business and refocus on its under-appreciated pharmaceutical business. The stock trades for a below-market average valuation and Andrew sees potential for a larger buyback program or boosted dividend next year.

General Motors might be valued at only a tenth of Tesla, but its electric vehicle ambitions shouldn't be underestimated. "Led by CEO Mary Barra, GM has lofty plans to roughly double its annual revenue to about $300 billion by 2030," Andrew writes. "That includes $90 billion in sales of electric vehicles, up from a projected $10 billion in 2023."

At just eight times projected 2022 earnings, the stock isn't pricing in huge odds of success. That makes GM a less risky way to bet on the future of transportation than most of the newly public EV pure plays.

Other picks for 2022 include Amazon.com, AT&T, and Royal Dutch Shell. Read about the rest of Barron's top 10 stocks here.