2 Unstoppable Stocks Set to Outgrow the Market (Again) in 2022

The benchmark S&P 500 index has risen roughly 19% this year in relatively smooth fashion. It's a great return for the average investor who purchased an index fund that tracks the broader market.

But for active investors, some individual stocks have performed substantially better. The stock price for small-business payments manager Bill.com Holdings (BILL -1.18%), for instance, is up 115% in 2021, and accounting software giant Intuit's (INTU -1.45%) stock price has risen about 48%. 

Both stocks have crushed the S&P 500, and with analysts predicting a return of 11% for the benchmark in 2022, the shares are set for a repeat next year. Here's why these two stocks seem unstoppable in 2022. 

Image source: Getty Images.

1. The case for Bill.com

Business owners would be familiar with the difficulty of tracking payments and receipts. Invoices are often sent and received in high volume, and typically through different methods, so there's always a chance some get missed, lost, or routed to the wrong place.

Bill.com is a cloud-based payment management platform for small to medium-size businesses, and it aims to solve that problem. It created a digital inbox that can aggregate the flow of invoices so they're all in one spot. Business owners can use the inbox to pay bills with a single click, and since it integrates with major accounting software providers, they can even update their books as they make transactions.

Bill.com acquires customers both directly and through affiliations with accounting firms and financial institutions. In fact, it's partnered with six of the top 10 U.S. banks, and these integrations are key to fast payment processing within the Bill.com network. 

The strategy has led to an explosive acceleration in revenue growth (and guidance).

Data source: Bill.com

After growing revenue by 51% between fiscal 2020 and fiscal 2021, Bill.com is set to nearly double that growth rate in fiscal 2022. After the economic reopenings in 2021, the business environment has slowly returned to normal, which has bolstered Bill.com's prospective customer base. But as the pandemic continues to abate, further economic certainty should unleash the small-business engine that drives the U.S. economy. 

The company has pursued some key bolt-on acquisitions to round out its product offerings, which should supercharge potential growth. It bought Invoice2go in September, a digital mobile-first back-office solution for small businesses, and Divvy in June, which is a leader in business expense management. 

While Bill.com isn't profitable yet, share-price growth will likely be driven by revenue, and it's clear the company is firing on all cylinders in that department. With the help of its recent acquisitions, all signs point to another year of market-beating performance for Bill.com.

Image source: Getty Images.

2. The case for Intuit

The next stock set to outgrow the market in 2022 is Intuit. Millions of small-business owners use its flagship accounting software QuickBooks, and while it's not expected to grow quite as fast as Bill.com, the company is highly profitable. 

QuickBooks is renowned for its affordable pricing, ease of use, and automated bookkeeping features. But Intuit also has a strong consumer-facing business through its TurboTax platform. Along the same lines, TurboTax empowers millions of consumers to manage their own tax affairs, keeping them out of the accountant's office.

Data source: Intuit, Yahoo! Finance.

While the consumer segment makes up a sizable 37% of total revenue, it tends to be seasonal (coinciding with tax season). It grew at 14% between fiscal 2020 and fiscal 2021, which lagged the 25% growth in QuickBooks online accounting, for example. Small business remains the ultimate driver of growth for Intuit.

For that reason (and much like Bill.com), Intuit stands to draw significant benefits from a more-certain business environment in 2022. 

Overall S&P 500 earnings are expected to grow by 9.3% next year, compared to 15.4% for Intuit. But Intuit trades at a much higher price-to-earnings multiple of 56, compared to 30 for the S&P. It suggests investors expect Intuit's earnings to grow at a faster pace over a longer period of time, and that its share price could experience outsize growth for its additional earnings relative to the index. 

But whichever way investors slice the numbers, Intuit looks set to outgrow the market in 2022.