Jan 1, 2022
Despite raging inflation and warnings from some prominent investors that the stock market is dangerously overheated, JPMorgan still expects a boost from “the January effect."
The phrase refers to the belief that the market’s best month tends to be the year’s first.
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This month, JPMorgan expects high-beta stocks with more volatility than the S&P 500 to outperform the market.
The bank’s analysts say high-beta stocks entered an “outright bear market” in 2021. That’s not because of a lack of value; investors have been selling them off in favor of stocks that offer lower volatility.
The low demand/high upside dynamic means “the January effect” could “be even more pronounced this time around” for high-beta stocks, according to JPMorgan analysts.
If they’re right, these three stocks might be in for a leap. And perhaps you’ll decide that one is worth jumping on with some of your extra cash.
Plug Power (PLUG)
Plug Power is at the forefront of the hydrogen fuel cell industry. By powering cars, trucks and large facilities like data centers and hospitals, HFC companies figure to be central to the planet’s sustainable future.
Plug also produces liquid hydrogen and projects that it will be the top U.S. producer of sustainable liquid hydrogen by late 2023 or early 2024.
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That’s the good news. Now the bad.
Plug’s Q3 earnings fell well short of expectations, while its net loss in the quarter hit $107 million, up from $65 million a year earlier. Plug has told investors that its gross margin remains under downward pressure from elevated production and fuel and service costs.
Plug’s share price is down about 23% in the last month alone. But if you believe in the future of HFCs, or that ESG investors might buoy the company, this may be your chance to get in for cheap.
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Moderna (MRNA)
Even after providing vaccine jabs for millions of people in 2021, Moderna has seen its stock slide about 18% in the last month. It’s down about 48% since peaking at $484.47 in August.
Investors appear doubtful of Moderna’s ability to maintain the COVID-driven momentum that’s put it on track for $17 billion in sales in 2021.
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But the majority of Americans have not received their boosters so far, and many medical experts predict we’ll need more shots. And mRNA-based shots like Moderna’s may be easier to adapt to new variants of COVID that might emerge.
Forbes has valued Moderna stock at $300 per share, which implies about 17% worth of upside if you were to buy at recent prices.
But remember: If the swings for individual companies’ stocks are too risky for your taste, you could always fall back on a more diverse portfolio — a popular app even lets you build one with your spare change.
Pinterest (PINS)
Shares in social media platform Pinterest were in a queasy up-and-down pattern for most of 2021, but their value has trended steadily downward since July.
Pinterest’s stock has dipped an eye-popping 54% in the last six months. There are several factors that contributed.
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In October, PayPal abandoned plans to acquire the company for $70 a share, a transaction that would have led to a $45 billion valuation for the platform. Pinterest’s third quarter earnings were solid — 43% year-over-year growth — but a paltry 1% increase in monthly active users during Q3, including a 10% decline in the U.S., marred results.
But with its reputation as a positive place to find inspiration with an unobtrusive ad experience, Pinterest’s average revenue per user rose by 37% in Q3, driving overall revenue for the quarter to $633 million.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
If you’re looking for long-term gains
Even if January is a big month for the stock market, there’s no telling how long those gains will last.
If you’re looking to strengthen your portfolio with more reliable, long-term bets in 2022, you might want to put some money into fine art, which has outperformed the S&P 500 almost every year since 1995.
It used to be that only the wealthy could afford to invest in modern masterpieces. But you can now buy shares in rapidly appreciating paintings by artists like Banksy, Monet and Warhol.
The art won’t wind up on your wall, but it could look good in your diverse portfolio.
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Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.
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