Undervalued Stocks for 2022, Outlook for the Market and Economy, and Your 2022 Financial Calendars

And Tesla. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=33530&elqTrackId=d073fe0322d34a9ea187f5def8abb306&elq=b1a456015dc54598a9b9e6464feb56a6&elqaid=33530&elqat=1&elqCampaignId=15654) [Smart Investor] Smart Investor with [Susan Dziubinski, Director of Content]( [Susan Dziubinski] Outlook for the Market and Economy in 2022 After experiencing yet another year of stellar returns from U.S. stocks in 2021, investors face a good deal of uncertainty heading into 2022. Valuations appear stretched. Economic growth is slowing. Inflation is higher than it's been in decades. And the Federal Reserve is tapering its asset purchase program and plans to raise interest rates. What can investors expect from the economy and stock market this year? "Despite a slowdown in GDP growth in the third quarter of 2021, along with rising concerns around inflation and the new omicron coronavirus variant, we think the U.S. economic recovery is far from finished," notes senior analyst [Preston Caldwell](. Our equity research team's [gross domestic product forecast for 2022]( is 3.9%. Moreover, the team doesn't view inflation as a threat to the recovery; it projects inflation will fall to 3.0% this year and average 2.2% over 2022 to 2025. What about stocks? "Although the market is broadly overvalued, we see upside opportunity for investors in the value category and small-cap stocks, both of which should benefit from continued economic prosperity," [says]( Morningstar's chief U.S. market strategist [Dave Sekera](. He also notes that if inflation persists, wide-moat stocks are a good place to be, because these companies usually have better pricing power and therefore have a better chance of maintaining their profit margins. And be sure to read [Dave's outlook for 2022]( to find out what market sector offers the most upside potential today based on our valuation metrics. (Those Smart Investor readers interested in in-depth recaps of the year in the markets, funds, and stocks can check out our comprehensive special report, [Morningstar's Take on 2021]( 33 Undervalued Stocks for 2022At the start of each year, I pull together an [Our Picks]( article that focuses on the three top ideas from our analysts across 11 different sectors. This year's installment, [33 Undervalued Stocks for 2022]( includes some names familiar to regular readers of the column, because these stocks have popped up in recent Our Picks articles--names like Hanesbrands HBI, Polaris PII, Merck MRK, and Salesforce.com CRM, for instance. Other stocks on the list, however, we've talked less about, like Macerich MAC and Lithium Americas LAC. What floors me: Although our analysts think the market is about 5% overvalued heading into the new year, several stocks on this week's picks list are trading at half of what our analysts think they're worth, representing tremendous upside potential in what many consider to be an otherwise frothy market. Perhaps it's time to back up the truck--or dip a toe in, depending on your investing temperament. Also, I want to plug the outlook pieces that our sector directors and strategists write each quarter. They're insightful reads. Find out [whether the worst is yet to come for utilities]( [why the healthcare sector has lagged the broader market]( and [whether we think the recent carnage in communication-services stocks will persist]( [among other sector insights.]( Stock of the Week: TeslaEarly this week, Tesla [reported]( strong fourth-quarter and full-year vehicle delivery numbers, boosting its total number of vehicles delivered by 87% versus 2020. After adjusting for these better-than-expected numbers and an increased 2022 forecast, analyst [Seth Goldstein]( reported that Morningstar raised its fair value estimate on Tesla to $700 from $680. That means shares are only 64% overvalued as of this writing, according to our metrics. Seth of course, agrees with just about everyone else that Tesla is a disruptor, but it's [a terribly overpriced disruptor]( today. Your 2022 Financial CalendarsMorningstar's director of personal finance and retirement planning [Christine Benz]( kicks off each new year with practical content focused on helping investors accomplish key financial jobs. [Your 2022 Financial To-Do List]( is Christine's month-by-month calendar that breaks down some daunting yet important money tasks; she makes them more manageable to check off your to-do list. Christine and I also talk about each month's tasks in videos that publish near the start of each month; you can watch our conversation about [January's financial to-dos](. Happy New Year to all Smart Investor readers! I hope it's a healthy, happy, and successful one for all. ADVERTISEMENT [media]( [media] Morningstar Specialists [What Lower Withdrawal Rates Mean for Retirement Savings]( [What Lower Withdrawal Rates Mean for Retirement Savings]( You might need to save a lot more. Amy C. Arnott, CFA [Why SPACs Are a Racket]( [Why SPACs Are a Racket]( If you like paying load fees, you’ll love special-purpose acquisition companies. John Rekenthaler [Your 2022 Tax Fact Sheet and Calendar]( [Your 2022 Tax Fact Sheet and Calendar]( Bookmark this guide to stay abreast of the tax-related dates and data that should be on your radar this year. Christine Benz [It Can Pay to Be Choosy When Investing in China]( [It Can Pay to Be Choosy When Investing in China]( The world's second-largest economy has a bigger influence than ever in many investors' portfolios. Ben Johnson, CFA [For Retirees, When Inflation Arrives Is as Important as Its Magnitude]( [For Retirees, When Inflation Arrives Is as Important as Its Magnitude]( A look at retirees, inflation, and sequencing risk. John Rekenthaler [The Year in ETFs]( [The Year in ETFs]( It was a record year for ETFs in 2021. Will 2022 be more of the same? Ben Johnson, CFA, Susan Dziubinski Popular This Week [Yes, Stocks Are Still Attractive]( Lower your expectations, but with bonds likely to struggle, the “TINA” market for stocks continues. Tom Lauricella [4 Charts on Apple's $3 Trillion Market Cap]( As Apple nears this milestone, what does it look like to be a $3 trillion stock? Jakir Hossain, Lauren Solberg [2021: The Year in Bond Funds]( Credit risk prevails in a rocky year for bond markets. Sam Kulahan, CFA [The Year in U.S. Stock Funds]( Value is back. Eric Schultz [Don't Be Fooled--the Jobs Market Is Strong]( The December jobs report may seem muddy, but it's strong enough for the Fed to start raising rates. Lauren Solberg, Preston Caldwell Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2022 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602