Why growth and dividend stocks will be hot items for 2022, along with these super-productive companies

A softer start is looming as we grind toward the end of what's been a whipsaw Christmas trading week thus far.

Cracked Market blogger Jani Ziedins said choppy action can partially be explained as big traders, and their steadier hands, have bailed for their holiday vacations, leaving junior and more impulsive ones to hold down the fort. Add the omicron coronavirus variant to that mix.

"While it is easy to get these guys to overreact to every little bump in the road, they have so little money that even when acting as a herd, they still cannot drive the market very far before running out of stuff to sell," he said.

The year has been rocky at times for growth names as investors have adjusted to the idea of higher U.S. interest rates, increasing the popularity of the defensive stock camp.

Our call of the day, from Navellier & Associates founder Louis Navellier, argues that 2022 is shaping up as a great one for growth stocks, as well as dividend-paying names.

That's as millions of new investors open brokerage accounts and turn to equities to protect themselves against the highest inflation rates seen in 39 years, he told clients in a note. And while selling by company insiders and other billionaires sparks fears of a bigger correction, Navellier argued we've seen that via omicron-driven market pullbacks between Thanksgiving week and Dec. 3.

Navellier now sees much of the risk "wrung out" of markets, and the year-end as a great time to buy, with most year-end tax selling now exhausted. As for growth and dividend stocks, he laid out four reasons for optimism:

1. Even with year-over-year comparisons tougher, a “narrower market is good news for growth stocks and dividend growth stocks and bad news for the ‘index fund’ crowd, since growth stocks and dividend growth stocks have traditionally prospered in a narrowing, more selective, stock market environment like this.”
2. The Fed is likely to stay “reasonably accommodative”, winding down quantitative easing by March, but with rates going up gradually.
3. Inflation will eventually dip, but stay above the Fed’s target through 2022. It’s likely to drop below 3% by late next year, and stocks will likely celebrate that.
4. Midterm elections will usher in a divided Senate/House/government that Wall Street is craving.

Navellier said investors can also profit from "pandemic-accelerated technological change" and higher U.S. productivity, where companies can make more money with fewer workers. He pointed to artificial-intelligence names such as with Nvidia; cybersecurity -- CrowdStrike and Fortinet -- 5G, with Alphabet, Cadence Design Systems, EPAM Systems and Keysight Technologies; electric vehicles -- Ford, Panasonic , VW -- and chip makers KLA and United Microelectronics.