Most investors were very sad to say goodbye to 2021, and with good reason. All the major indexes had an incredible year, with the S&P 500 leading the group with a 26.9% gain, followed by the Nasdaq’s 21.4% increase and the Dow Jones industrials at 17.7%. The S&P 500 posted an astounding 70 new all-time highs during the year, a record only surpassed by 1995. The bottom line is, if you didn’t make money last year, then you probably want to switch financial advisors.
With the looming storm clouds on the horizon, and the potential for as many as four interest rate increases, many strategists on Wall Street feel we will be fortunate to have high single-digit gains in 2022. We could very well have a 20% or bigger sell-off added to the mix. Goldman Sachs feels like energy and quality utility stocks are among the best ways for investors to go this year. These four stocks all pay big dividends and could very well offer shelter from the storm. Hard assets like real estate should also do well in a rising interest rate environment, and we found a very solid pick on the Conviction List.
While all four of the Conviction List picks are among the top ideas at Goldman Sachs, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
DTE Energy
With the potential for more frigid winter weather, this company may look to extend gains well into 2022. DTE Energy Co. (NYSE: DTE) is the largest utility in Michigan. Its largest operating units are DTE Electric, an electric utility serving 2.2 million customers in southeastern Michigan, and DTE Gas, a natural gas utility serving 1.3 million customers in the state. DTE Energy also has non-utility energy businesses that focus on power and industrial projects, natural gas midstream and energy trading.
The company’s Gas segment purchases, stores, transports, distributes and sells natural gas to residential, commercial and industrial customers throughout Michigan, and it sells storage and transportation capacity. This segment has approximately 19,800 miles of distribution mains, 1,305,000 service pipelines and 1,273,000 active meters, as well as approximately 2,000 miles of transmission pipelines.
Its Gas Storage and Pipelines segment owns natural gas storage fields, lateral and gathering pipeline systems and compression and surface facilities. It also has ownership interests in interstate pipelines serving the Midwest, Ontario and northeast markets.
The company’s Power and Industrial Projects segment offers metallurgical coke; pulverized coal and petroleum coke to the steel, pulp and paper, and other industries; and power, steam and chilled water production, and wastewater treatment services, as well as supplies compressed air to industrial customers.
Shareholders receive a 2.97% dividend. The Goldman Sachs price objective on DTE Energy stock is $138, well above the $129.00 consensus target price and Thursday’s closing share price of $119.83.
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NRG
This stock has made a nice run off the lows and is another solid idea for investors who are more conservative. NRG Energy Inc. (NYSE: NRG) operates as an integrated power company in the United States that produces, sells and delivers electricity and related products and services to 3.6 million residential, industrial and commercial consumers.
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