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JPMorgan Likes Amazon, Apple, McDonald's, Lennar for 2022

The bank’s analysts, led by Nicholas Rosato, expect the S&P 500 index to reach 5,050 next year, up 8% from 4,697 recently.
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J.P. Morgan analysts have a chosen a basket of top growth and value stocks for next year, including Amazon  (AMZN) - Get Amazon.com, Inc. Report, Apple  (AAPL) - Get Apple Inc. Report, McDonald’s  (MCD) - Get McDonald's Corporation Report and Lennar  (LEN) - Get Lennar Corporation Class A Report.

The bank’s analysts, led by Nicholas Rosato, expect the S&P 500 index to reach 5,050 next year, up 8% from 4,697 recently.

That’s based on “continued robust earnings growth, as labor-market recovery continues; consumers remaining flush with cash; supply chain issues easing; and the inventory cycle accelerating off of historical lows,” they said.

“Most of the equity upside should be realized between now and the first half of 2022, when monetary and fiscal policy tailwinds will be strongest.”

That should be “followed by sideways action in the second half of 2022,” they said. Federal Reserve interest-rate hikes “could drive some de-risking and intra-cycle correction.”

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Amazon constitutes J.P. Morgan’s “best idea” in the Internet space. 

It “has doubled the size of its fulfillment network over the past two years and is now caught up on capacity, suggesting spending growth could begin to slow during 2022,” J.P. Morgan said.

As for McDonald’s, it is “inflation-protected, with more than 93% of stores globally-franchised, where the company collects a combination of rents and royalty payments from the franchisee’s top-line,” J.P. Morgan said.

When it comes to Apple, “we see AAPL shares well positioned for upside led by a strong iPhone 13 product cycle relative to investor expectations,” the analysts said.

As for Lennar, J.P. Morgan likes the valuation, and “we point to our outlook for above average operating margins and order growth in 2022.”

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