The outlook for U.S. stocks in 2022 continues to be very bright. At its December 15, 2021 meeting, the Federal Open Market Committee (FOMC) projected three interest rate increases of ¼% each in 2022 and 2023 and two more in 2024. If implemented, these increases would result in historically low Federal Funds rates of 0.75%-1.00% at the end of 2022, 1.5%-1.75% at the end of 2023, and 2%-2.25% at the end of 2024. Core PCE inflation, the Federal Reserve’s preferred measure of inflation, is projected to equal 4.4% in 2021, but decline to 2.7% in 2022, 2.3% in 2023, and 2.1% in 2024.

Furthermore, the FOMC forecasts an unemployment rate of 4.1% for 2021, but only 3.5% in each year from 2022-2024. This matches the 3.5% rate achieved in February 2020, prior to the onset of Covid-19 and its lowest level in many decades.

Corporate profits should continue to grow in 2022 as the economy continues to recover from the pandemic. Although with the Omicron variant and others that may appear in the months ahead, it is likely that advances being made in the development of both vaccinations and treatments will enable the economy to maintain its growth trajectory.

Since equity prices are primarily determined by interest rates and corporate profits, new highs can reasonably be expected in the major market indices such as the S&P 500 in 2022. I estimate that the total return (capital gains plus dividends) to the S&P 500 will approximate 10%, equaling its average return over the past 100 years.

Against this very favorable background, I recommend the following equally-weighted portfolio of 12 stocks for 2022.

Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL): The growth prospects for this search and ad giant remain very bright. Its valuation is reasonable with its current price/earnings ratio of 28 below that of 30 for the S&P 500.

Amazon (NASDAQ:AMZN): Expanding into new markets is something Amazon has done well, not just in retail but in cloud services as well. I expect this innovative and disruptive expansion to continue successfully in the future.

Apple (NASDAQ:AAPL): This tech giant remains the largest single stock holding of Berkshire Hathaway and Warren Buffett, representing about 50% of Berkshire’s equity portfolio. Its outlook continues to be very bright with a reasonable valuation of 31 times its price/earnings ratio, approximating the ratio of 30 for the overall S&P 500. It is a profit generating machine.

Bank of America (NYSE:BAC): This very well managed bank is the second largest equity holding in Berkshire Hathaway’s equity portfolio. With a price/earnings ratio of 13, its valuation is less than one-half that of the overall market.

Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B): This extremely well managed conglomerate by Warren Buffett has substantially outperformed the market over its 55-year history, with a compounded annual return of 20% per year as compared to 10% for the S&P 500. Warren Buffett has recently been buying back its shares indicating that he views these shares as being undervalued.

CVS Health (NYSE:CVS): The world’s largest drugstore chain is poised to have a healthy year. With a new management team led by CEO Karen Lynch and having merged with Aetna, CVS has expanded its healthcare delivery and is hiring more healthcare providers. It is playing a key and profitable role in providing COVID-19 and flu vaccinations to customers. It seems like there is a CVS almost in every neighborhood providing great growth opportunities and relatively little risk going forward.

Global Payments (NYSE:GPN): FinTech payment companies like PayPal (NASDAQ:PYPL) and Block (Square) (NYSE:SQ) saw their stocks decline in 2021, but have bounced back recently. That makes a company like Global Payments, which fell 50% this year, attractively priced. I expect profits and revenues to increase at a reasonable rate going forward over the next few years, especially with a large stock buyback and excellent growth opportunities.

Meta Platforms (NASDAQ:FB): The Facebook parent company experienced a tumultuous year, but still performed. Facebook is a cash flow machine which dominates the social network space with almost 3 billion monthly active users representing a significant participation rate globally of the approximate 8 billion population.

Microsoft (NASDAQ:MSFT): One advantage Microsoft has over large technology companies like Google, Facebook or Amazon is that it is not currently under the microscope of regulators. If you want a high-tech company with rapid growth and less regulatory and political risk, Microsoft is a good bet.

Nu Holdings (NYSE:NU): The parent company of Brazilian online bank, Nubank, had its IPO at $9.00 on December 8, 2021. Berkshire Hathaway backed the company in its pre-IPO stages with a $500 million investment last June and since then purchased another $260 million at the IPO price for a total investment currently valued at about $1 billion. There is substantial growth potential of this highest-valued Latin American financial institution.

NVIDIA (NASDAQ:NVDA): This computer chip maker saw a phenomenal year of growth in 2021, becoming the seventh-largest U.S. company by market capitalization, behind only Apple, Microsoft, Amazon, Alphabet (Google), Tesla, and Meta Platforms (Facebook). Nvidia dominates the chip market and has a lot of growth ahead of it, despite current microchip availability issues.

Teck Resources (NYSE:TECK): Shares of the Vancouver-based miner of coal, copper, and zinc are reasonably valued and flying a bit under the radar. As the economy shifts from combustion engines to EVs, copper will be the new oil in the years ahead. This will not happen overnight, but this company is well-positioned for the future.