Sure competitively advantaged long-term winners underperformed even more dramatically last year, making them strong candidates to outperform the market in 2022. Amazon (NASDAQ: AMZN) and JD.com (NASDAQ: J.D.), as well as significant telecom T-Mobile, are among them (NASDAQ: TMUS).
Amazon and JD.com
E-commerce stocks, in general, found 2021 to be more difficult than 2020. It should come as no surprise. During the early stages of the COVID-19 pandemic, their growth skyrocketed as people who avoided public spaces ordered more of the goods they required online. However, a year later, those periods of rapid growth presented difficult comparisons. As global economies reopened and people relaxed their social distancing efforts after vaccine rollouts, e-commerce growth rates slowed.
The Motley Fool preaches the virtues of long-term investing. Hence, many investors believe that the companies in their portfolios must outperform every year or quarter.
Amazon’s overall top-line growth was disappointing last year, owing to the aforementioned difficult comps as well as supply chain pressures that slowed growth and increased costs. However, Amazon is now more of a conglomerate than an e-commerce player. Its lower-revenue but higher-profit Amazon Web Services and digital advertising segments expanded quickly. AWS’s growth accelerated, as did Amazon’s “other” category, generating most of its revenue from digital ads.
Because the United States’ recent economic growth figures have been strong. Those two segments should continue to perform well as more enterprises migrate to cloud computing and more ad dollars flow to online and streaming platforms.
Meanwhile, after a challenging year for Amazon’s e-commerce segment last year, comps will be much easier in 2022. And, hopefully, supply chain issues will be reduced as well, easing pressure on profitability.
JD.com Looks Relatively Well-Positioned
Last year, the Chinese government’s regulatory crackdown sent all Chinese tech stocks virtually into a tailspin, including JD.com. It fell by more than 20% in 2021 and now trades 35% below its all-time high.
While Beijing is attempting to rein in the tech sector as a whole, new regulations may help JD.com compete. For example, its rival Alibaba (NYSE: BABA) has traditionally used its market-leading scale to coerce brands into exclusivity agreements. However, the country’s regulators recently prohibited that practice, allowing JD.com to compete on a more level playing field.
T-Mobile
The telecommunications industry also had a bleak outlook for 2021. It saw a significant increase in wireless and broadband subscriptions in 2020, but growth slowed last year.
On the other hand, T-Mobile has sold off along with the sector and is down 14% in 2021. Its operating results have been excellent, and it has long been a “share taker” throughout its history. T-Mobile has made a habit of shaking up the U.S. wireless industry with lower-priced plans and customer-friendly features in an industry that isn’t exactly known for them since branding itself the “un-carrier” about a decade ago. T-Mobile now has another significant advantage: its best 5G network. Its acquisition of Sprint in 2020 provided a vital mid-band spectrum for 5G, which offers game-changing speeds in areas where high-frequency millimeter-wave range falls short.
As of December, T-Mobile was delivering mid-band 5G to a coverage area of more than 200 million people, a feat that its competitors will not match for another two years. T-Mobile anticipates that by then, 300 million people will be within its 5G coverage area, which will extend into more rural areas of the country.
