New year. New me. New watchlist?
Over the coming days, I’ll be introducing 22 stocks I think are worth tracking over 2022.
Not all will be winners. Some will even be losers. But each offers the potential for market-beating returns.
Let’s dive into the first four.
Online jobs platform Airtasker is a company that divides market participants.
It’s essentially the online version of the Yellow Pages, connecting potential customers with skilled contractors.
From an investor’s lens, Airtasker is capital-light, has relatively fixed costs, and is the clear number one in Australia.
However, in its latest quarterly update it recorded just 6.2% year-on-year growth and a cash outflow of operations of $4.08 million.
Admittedly, Airtasker is currently cycling elevated prior year comps. But the growth and outflow is a concern given it should be a cash-generating machine.
Nonetheless, it will be one to watch over 2022.
Similar to Airtasker, the flying kangaroo is another company dividing the market.
Bulls will point out that its main competitor, Virgin, is a shell of its former self.
Additionally, Qantas has stripped $650 million out of its cost base, which will materially improve its profitability given the low-margin nature of airlines.
Add in soft prior year comps and the FY22 and FY23 results will look very flattering.
However, it’s still an airline. Business travel won’t be the same, and even leisure is now a more arduous process with the testing and paperwork required just to step on a plane.
Qantas might be a better airline post-pandemic, but will that result in better shareholder returns?
The rise of ESG investing, particularly over the past 18 months, has led to institutions and fund managers shunning old-world energy companies.
In fact, many pension and superannuation funds are not even allowed to own coal companies on environmental grounds.
However, coal is still required (at least over the medium term) to keep the lights on. To illustrate, Indonesia today banned exports of coal over concerns it could not meet its own domestic demand.
With Whitehaven trading on less than 3-times analyst profit expectations, could private investors fill the void?
It’s been a difficult 18 months for Tabcorp.
Its gambling operations face increasing competition from the likes of digital disruptors such as Sportbet.
Furthermore, traditional TAB venues have been closed sporadically due to pandemic restrictions.
So what’s to like?
The business is set to demerge its lotteries division in 2022, which could be the catalyst for a rerating of the Tabcorp share price.
Lotteries is the opposite of gambling. It faces no competition, benefits from the shift to digital, and is capital-light.
Subsequently, I’ll be keeping a keen eye on Tabcorp over 2022.