10 top stocks in 2021 give hope for 2022

Stockopedia’s Ben Hobson looks at some great performances this year and describes what it means for stock pickers in the months ahead.

It’s hard to escape the growing sense of unease in places about the possible impact of the Omicron Covid variant. So far, the stock market has been sanguine. But for those hoping for a Santa Rally in share prices this month, the circumstances aren’t exactly ideal.

During 2021, we started to see how Covid had disrupted supply chains. This was one of several factors blamed for pushing up inflation. Analysts still don’t agree whether this upward price pressure is short term or something we need to get used to. But what is certain is that more turmoil and disruption is the last thing anyone needs.

• Don’t be shy, ask ii…what is a 'Santa rally' in the investing world?
• New poll: here’s where you think the FTSE 100 will end 2022
• Will stock markets be full of festive cheer in December?

But it’s not all bad news. Despite recent volatility, this year has been a solid one for the main FTSE 100 and FTSE 250 indices. The combined FTSE 350 index is up by 11.2% year to date, taking it back to the kind of ranges seen prior to the Covid crash in early 2020. And if you dig a bit deeper into those index performances, you’ll find that some stocks have done very well indeed.

Past performance is not a guide to future performance.

One of the interesting observations from to- performing shares over the past couple of years is the sheer diversity of companies, styles and sectors. As markets have recovered, we’ve seen strong recoveries in some value shares, incredible momentum in some expensive cyclicals and, of course, bullish moves in stocks that investors clearly believe will be longer-term post-Covid winners.

Here are some of the best performing shares over the past 12 months on a relative strength basis (meaning that the performances are relative to the underlying movements in the market):

The best-performing stock here is Watches of Switzerland (LSE:WOSG), the high street retailer of high-end watches. It’s one of a number of cyclicals that have done well in the current conditions. Another is the publishing group Future (LSE:FUTR), which has seen revenues soar on higher online sales and successful expansion in the US.

High street bakery chain Greggs (LSE:GRG performed well on the back of signs that it is putting a year of losses behind it and is forecast to deliver record sales and profitability in 2022. Another stock to slump to losses last year was Spire Healthcare (LSE:SPI), the private medical group. Spire is also forecast to recover strongly in the year ahead, likely helped by growing public interest in private healthcare.

• Trading secrets: how fund managers beat the market
• Shares for the future: my top 40 stocks after dumping this one
• Take control of your retirement planning with our award-winning, low-cost Self-Invested Personal Pension (SIPP)

Safestore Holdings (LSE:SAFE), the real estate investment trust that runs self-storage facilities in major cities, suffered relatively little operational disruption over the past year. But as the restrictions eased, it found itself in a market sweet spot and the share price responded. Likewise, equipment rental group Ashtead (LSE:AHT) saw its share price take just a few months to recover from the market dip in early 2020 - and it has been on a terrific run ever since.

Looking ahead to 2022

As the year draws to a close, there’s no doubt that the uncertainty over Omicron will test investors going into 2022. Economic disruption at home, as well as wider, more international consequences will likely weigh on the market at times.

But, as always, what we’ve seen in 2021 is that some stocks will shake off these kinds of concerns. They may have competitive advantages that protect them, or happen to be well placed to benefit in different ways from the uncertainty. Whatever the reason, they show that stock-pickers with an eye for opportunities can still do very well even in the trickiest of markets.

Stockopedia helps individual investors beat the stock market by providing stock rankings, screening tools, portfolio analytics and premium editorial. The service takes an evidence-based approach to investing, and uses the principles of factor investing and behavioural finance to help investors make better decisions. Stockopedia is rated Excellent on Trustpilot and was named Best Research Service and Best Investment Tools Provider at the 2021 UK Investment Magazine awards.

Interactive Investor readers can get a free 14-day trial of Stockopedia here.