By David Wagner and Yassine Maroufi
Investing.com - Many growth investors are looking for the latest high-potential investment themes so as to buy the right stocks ahead of most other investors, and thus reap the huge gains promised to those with "first mover advantage". The trade-off, of course, is taking far more risk than investing in stocks in established sectors.
2021 has seen the emergence or reinforcement of several cutting-edge investment trends, which may present interesting opportunities for investors who want to try to get ahead of the curve in 2022.
In this article, we'll discuss three of these recent investment trends that could pop in 2022, along with relevant stocks that interested investors might learn more about for each theme. These are not necessarily top themes, just emerging themes worth a spot on savvy investors’ radar. Similarly, the individual stocks mentioned for each of the investment themes discussed in this article are not recommended stocks to buy, but simply illustrative examples of stocks to follow for each theme.
All pricing data as of December 23rd market close.
Batteries and Lithium
Environmentally conscious investors have long been drawn to the electric vehicle sector, as experts believe EVs will replace gasoline and diesel vehicles in the coming decades. Other environmentally oriented investors are more interested in clean energy production, with investments in solar, wind or hydroelectric power.
But perhaps the best way to invest in renewable energy is via renewable energy storage, and more specifically, batteries. Subject to the vagaries of weather and seasons, the production of clean and renewable energies must face the problem of storage and energy distribution to consumers. So if governments around the world intend to make a total transition to clean energy, the need for energy storage, and therefore for batteries, should escalate dramatically. Investors in this field can either look at battery manufacturers or consider more direct investments in lithium producers, an essential raw material for batteries.
Notable Stocks in the Batteries and Lithium Industries
Lithium Americas Corp (NYSE:LAC)
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Current price: $29.06
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Market Cap: $3.4B
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Business: Lithium exploration and production
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InvestingPro fair value: $18.39 (-37% downside)
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Average 12-month analyst target: $35.24 (22% upside)
Livent Corp (NYSE:LTHM)
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Current price: 24.99
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Market Cap: $4B
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Business: Lithium compound manufacturing
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InvestingPro fair value: $15.89 (-36% downside)
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Average 12-month analyst target: $29.77 (19% upside)
Quantumscape Corp (NYSE:QS)
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Current price: $24.57
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Market Cap: $10.4B
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Business: Lithium Battery Developer/Researcher
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InvestingPro fair value: $19.62 (-20% downside)
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Average 12-month analyst target: $32.33 (32% upside)
Psychedelic Medicine
Following cannabis’s trajectory from a few years ago, some psychedelic and hallucinogenic substances once considered illegal drugs are attracting the attention of the medical world.
Although it is an industry in its infancy, the potential of psychedelic healthcare has been supported by numerous studies.
Investors are turning their attention, and more importantly their capital, to this growing sector for three main reasons: the global need for effective mental health treatments, evolving legislation and regulation, and broad public support.
First, in the context of a post-COVID world, psychedelic care will become an essential tool in the treatment of worsening mental health problems. According to the UK charity Mind, more than two-thirds of adults with mental health problems reported that their mental health worsened during the lockdown. We still don't have a full picture of the impact of this period, or how the pandemic affected the general population.
In response, pharmaceutical companies are seeking to invest significantly in new medical treatments to address this problem.
Governments are also being encouraged to act quickly to protect the well-being of their citizens. In this context, the stocks of companies preparing treatments for mental illness based on their research into psychedelic drugs could be in high demand in 2022.
Notable stocks in Psychedelic Medicine
Mind Medicine Inc (NASDAQ:MNMD)
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Current price: $1.69
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Market Cap: $712M
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Business: Research and development of drugs based on psilocybin and LSD
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InvestingPro fair value: $1.54 (-9% downside)
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Average 12-month analyst target: $8 (100%+ upside)
Cybin Inc (NYSE:CYBN)
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Current price: $1.26
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Market Cap: $203M
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Business: Research and development of drugs based on psilocybin and other psychedelic compounds
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InvestingPro fair value: $1.24 (-1% downside)
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Average 12-month analyst target: $8.21 (100%+ upside)
Compass Pathways Plc (NASDAQ:CMPS)
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Current price: $23.78
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Market Cap: $992M
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Business: Research and development of psilocybin-based drugs and treatments
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InvestingPro fair value: $17.69 (-26% downside)
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Average 12-month analyst target: $82.1 (100%+ upside)
Building the Metaverse(s)
Although the definition of the metaverse is still up for debate, investors have not hesitated to bid up investments related to this concept since Facebook (NASDAQ:FB) made the creation of a metaverse its main objective, rebranding its business as Meta Platforms to mark the occasion.
In concrete terms, the metaverse refers to an online space that can be navigated in virtual reality, and that would allow all sorts of social and commercial interaction. Some analysts believe that this is the next great revolution of the Internet.
However, since it is still a vague concept that has not really been implemented by anyone yet, choosing the best stocks to bet on the metaverse is not easy.
There are some stocks that are less risky metaverse bets than others. Indeed, many experts believe that instead of betting on stocks of companies that want to have a business directly related to the metaverse, investors would be better off looking at the architects of the metaverse, or the companies that own the technologies needed to create metaverses.
In this area, graphics card and computer chip manufacturers seem like obvious choices, since no matter what, creating navigable metaverses in virtual reality will require immensely more graphics processing power than is currently required for games and experiences taking place on conventional computer screens.
In addition, chip stocks are also ideally positioned to take advantage of many other trends set to explode in 2022, such as artificial intelligence, cloud computing and data centers, and cryptocurrency mining.
But software will also come into play in the metaverse, as companies that own graphics technologies that are essential to the artistic and technical creation of metaverses may become attractive.
Notable Stocks for the Metaverse
NVIDIA Corporation (NASDAQ:NVDA)
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Current Price: $296.4
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Market Cap: $741B
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Business: Semiconductor manufacturer (graphics processing units, among other chips)
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InvestingPro fair value: $225.66 (-24% downside)
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Average 12-month analyst target: $333.16 (12% upside)
Unity Software Inc (NYSE:U)
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Current Price: $145.57
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Market Cap: $42.5B
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Business: Software to help create 3D environments
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InvestingPro fair value: $103.29 (-29% downside)
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Average 12-month analyst target: $174.46 (20% upside)
Matterport Inc (NASDAQ:MTTR)
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Current Price: $23.22
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Market Cap: $5.9B
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Business: Virtual building reproduction technology
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InvestingPro fair value: $14.72 (-37% downside)
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Average 12-month analyst target: $30.20 (30% upside)
Read also: What To Expect From Global Markets In 2022: Growth and the Rise of Small Caps
Find the full 2022 Market Outlook series here.