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 “boringâ€, 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 Exchangeâ€, 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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