The benchmark S&P 500 index is down another 2.0% on Tuesday as investors continue to pull out of the equity market on fears of quantitative tightening, but Grace Capital’s CIO says the following two stocks, while “boring”, will likely outperform this year.
Her first pick is the liquefied natural gas company Cheniere Energy that noted a 65% increase in its stock price last year. Yet, Catherine Faddis remains bullish on LNG for 2022. On CNBC’s “Worldwide Exchange”, she said:
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Cheniere doesn’t have commodity price and volumetric risk; pretty boring. But the world needs natural gas because you can’t survive on ESG. You buy LNG, you get a 6.0% yield and about 6.0% growth a year. It’s made a lot of money for us, and that’s what you need in this environment.
Her outlook on the broader market, however, is dovish – in sharp contrast with Michael Sheldon, who remains constructive on stocks for 2022.
Unitil Corporation (NYSE: UTL)
Faddis’ second “boring” pick is the Hampton-based utilities company, Unitil Corporation. Explaining why she likes the stock that’s lost a little under 25% in the trailing nine months, she said:
It’s a rate play, it’s a dividend play. Yes, if the Fed is raising rates, it should be bad for utilities and other dividend-paying stocks. But it’s much safer than these high-flying growth stocks. It yields 3.7%, market cap is under $1.0 billion. It’s well-managed and got strong earnings targets.
In its latest reported quarter, Unitil topped the consensus estimate for revenue by a significant margin. At 3 cents a share, earnings, however, were lower-than-expected. Analysts forecast the utilities provider to report $2.34 in EPS this fiscal year.
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