The stock market has enjoyed a bit of a rally these past few days as new data shows existing vaccines should be effective against the Omicron variant.

However, with infection rates trending to all-time highs, speculation is emerging of another round of UK lockdowns in January next year. If that were to happen, the recent stock market rally could quickly be reversed.

Early 2020 serves as a good preview of what 2022 lockdown restrictions could mean for investors. But assuming the worst comes to pass, which stocks are the best to buy now to protect my portfolio?

I’ve spotted one business that might not only be able to survive the storm but also thrive in it. Let’s take a look.

Takeaway ready and waiting

Despite being stuck at home last year, it seems a large portion of the British population weren’t too keen on cooking their own meals. This is evident when looking at the various food takeaway services which saw massive spikes in order volumes throughout 2020.

After restrictions started loosening, more people ventured back into pubs and restaurants. But the demand for takeout has remained elevated. And now that the probability of a January lockdown is on the rise, takeout may once again become the go-to dinner option.

One stock in particular that has caught my attention is Domino’s Pizza Group (LSE:DOM). This franchise chain profited from some significant tailwinds during the early days of the pandemic. While there were some initial disruptions, the company shifted its customers from collection-based ordering to delivery.

As a result, like-for-like system sales grew a respectable 10.3% by the end of the year, with net debt falling by around £61m and underlying profits also on the rise. Now with a Covid-ready operational structure in place, should the January lockdowns become a reality, Domino’s might be able to thrive even more than before. At least, that’s what I think. And it’s why Domino’s is on my best-stocks-to-buy list.

What could go wrong?

Even if a January lockdown doesn’t happen, Domino’s may still be able to thrive. Its continued strong performance throughout 2021 serves as evidence of that. However, just because it might be one of the best stocks to buy doesn’t mean it’s a risk-free investment.

The company is certainly not the only takeaway option. In fact, many restaurants deployed a takeaway service last year to get some revenue flowing when table dining was prohibited. And with more options available than before, Domino’s may struggle to attract a rapid rise in order volumes. Needless to say, this potential loss of market share would be bad news for its share price.

Best stock to buy for a January lockdown?

Despite the risks Domino’s faces, I remain optimistic about its share price potential. And having enjoyed its pizzas during last year’s lockdowns, I think it’s likely I’ll be doing the same in January, should restrictions return. Therefore, I am considering this business as a potential new addition to my portfolio.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Dominos Pizza. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Whatever happens with the pandemic over the next few weeks and months, 2022 will be a crucial year for the IAG (LSE: IAG) share price. After two years of disruption, rising losses and cost-cutting, the British Airways owner needs to get itself firmly back on track. Unfortunately, there is no guarantee the company this will happen. 

I think three different scenarios are likely to dictate the stock’s performance next year. 

Three different scenarios

In the best-case scenario, the global aviation industry will bounce back to 2019 levels next year. If traffic recovers to, or exceeds, 2019 levels, management will be able to start looking forward. It will finally be able to concentrate on rebuilding the business after the pandemic. 

For IAG, which relies heavily on the lucrative transatlantic and long-haul travel routes, a recovery in international travel will be the most crucial development for the company. 

While the number of travellers on domestic routes in the US and Europe has recovered substantially from pandemic lows, traffic on international routes is still underwhelming. In the best-case scenario, traffic on these routes will recover, which should power an earnings recovery. 

And if this happens, I think the market will re-rate the stock to a higher level if the company’s outlook improves considerably.

In the base-case scenario, the number of travellers will remain depressed at around current levels. As  IAG shares are already priced for this scenario, I think the reaction from the market to such an outcome would be relatively modest. 

Finally, the worst-case scenario is a return to March 2020 conditions. Government travel bans will force the aviation industry back into cold storage. If this happens, IAG may have to look to its investors and creditors to provide additional financing to keep the lights on. 

In this scenario, I think the stock could fall further in value. The overall decline will ultimately depend on the company’s financial position and if it has to raise additional capital. 

The outlook for the IAG share price

I think the base-case scenario is the most likely outlook for the stock next year. I think it is unlikely the world will shut down again, considering how much disruption the first set of lockdowns caused. 

However, this does not mean governments will do away with travel bans. It seems likely that these will remain the key tool in controlling the pandemic for the foreseeable future. While this might be good for the domestic hospitality sector, it is terrible news for international travel. 

As such, I am not expecting much from the IAG share price in 2022. Therefore, I would not buy the stock today. I think there are plenty of other opportunities in the FTSE 100 that offer better growth prospects. That is considering the challenges of the pandemic and growth prospects for the economy next year.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

After two years of disruption, many investors, including myself, will be wondering what is next for the Cineworld (LSE: CINE) share price in 2022? Indeed, I recently changed my opinion on the company after data emerged showing that consumers were flocking back to cinemas. 

Unfortunately, the company’s recent share price performance does not reflect this positive development. As such, I am wondering if the market will start re-evaluating the company next year. 

The outlook for the Cineworld share price

The way I see it, three possible scenarios could play out next year. The first is the most bullish, based on the continuing recovery of the UK economy and consumer confidence.

If the trends that have played out over the past couple of months continue into 2022, I think Cineworld will be firmly on the way to recovery. Rising sales and profits will allow the group to start chipping away at its debt, which should dramatically improve investor sentiment towards the enterprise. 

In the mid-ground scenario, the company will continue to bumble along at current levels of activity. The organisation will reduce losses, but profits will not be enough to make a meaningful dent in debt.

Without reducing debt, there will always be a risk that the business will have to tap shareholders for additional cash. Until the company deals with this risk, I think the stock will remain under pressure. 

The final scenario is the worst. Here, the economic restrictions that were in place at the beginning of the pandemic return. Cineworld is forced to close its theatres around the world again and rely on government aid to keep the lights on. 

I think there is a genuine chance the business could collapse in this scenario. Creditors are generally only prepared to support any company for a short period. If there is no end in sight to the restrictions, they may decide to pull the plug altogether. 

Moving forward

I think the most likely scenario for the company is somewhere between the most bullish and the base case. As I noted at the beginning of this article, data shows that consumers are returning to cinemas. However, I think it is almost certain that rising coronavirus cases will hit consumer sentiment.

Therefore, Cineworld’s growth, which was accelerating in October and November, may slow over the next few weeks. Sentiment may begin to improve again if cases decline in the first few months of the new year. 

As such, I am cautiously optimistic about the outlook for the Cineworld share price. That is why I would acquire the stock as a speculative purchase for my portfolio today. If consumer confidence continues to build in 2022, I think the company can make a good start at reducing debt and moving on from the pandemic.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

In August, short-seller Boatman Capital launched an attack on the Argo Blockchain (LSE: ARB) share price. The short-seller criticised the company’s decision to pay $17.5m for 160 acres of land in Texas to construct a new Bitcoin mining operation.

Boatman argued that using a formal appraisal process and comparing the property to other blocks of land in the region, a more appropriate valuation would have been $168,000.

This week, Boatman has published another report. Since the initial statement was published, it claims other issues have come to light that raise further questions about Argo’s business strategy and corporate governance. 

Boatman’s accusations

The short-seller raised nine points in its report explaining its view on the company. In my opinion, the most important observation is that the firm has seen four of its five board directors quit this year. And the fact that its CEO is currently also interim chairman, which is a breach of UK corporate governance guidelines. 

Boatman also points out that the company has been leaning heavily on shareholders to fund ongoing business costs. The group has diluted shareholders by 52% this year. It has also relied on funding from junk bonds and a Bitcoin-backed loan (with an interest rate of 11.5%). 

Issuing new shares to fund capital spending projects is not that unusual. Many smaller companies follow this approach if they cannot fund spending from operations. 

But the downside of this approach is that it dilutes shareholders. For every new share issued, existing investors’ claim on the underlying business (and its profits) declines. 

Interestingly, Argo is asking investors for cash when it reported a mining profit of $9.6m in November. It also owned 2,317 Bitcoin, or Bitcoin Equivalent at the end of the month. 

The outlook for the Argo Blockchain share price

I think it is worth taking Boatman’s views on the company into account. It explains why the market is placing such a low valuation on the stock.

Despite reporting a mining margin of 86%, the stock is trading at a forward price-to-earnings (P/E) multiple of just 8.7. Peers in the sector command multiples of 20 or more. 

Whenever I have covered the company in the past, I have always made it clear that I believe the market will continue to view the business with scepticism until Argo can prove its worth. 

With profits growing and its mining expansion underway, I think the corporation is doing just that. 

As such, despite the accusations from Boatman, I would continue to buy the stock for my portfolio as a speculative investment. I think the company is one of the best ways to invest in the cryptocurrency sector, mainly due to its strong balance sheet and probability.

However, I will be keeping an eye on the risks outlined by Boatman. These could cause me to change my opinion of the business if they become problematic. 

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The world of penny stocks can be exceptionally alluring to investors. Watching a business’s share price explode by triple, or even quadruple, digits in a matter of months can lead to a substantial fear of missing out. Of course, this emotional trap probably ranks as one of the top catalysts to making poor investment decisions. But is there a way for me to filter out the duds?

Over my near-decade of investing experience, I’ve spotted two common traits that could indicate a stock price is on the verge of collapse.

Penny stock trap #1: undiversified revenue stream

As with any business, a better-than-expected earnings report is often a driver for explosive growth. This effect is only amplified as the market capitalisation gets smaller. Typically, securing new customers or contracts can be responsible for impressive returns. But while most investors are too busy getting excited by the hype, I sit back and ask a simple question – where is the money coming from?

All too often people focus on whether or not the top line is expanding and then end their enquiry there. But just because revenue is climbing doesn’t mean it’s sustainable. Take Novacyt as an example.

This young medical diagnostics firms hit the motherload when the pandemic reared its ugly head. By being the first company to produce a Covid-19 rapid testing kit, its revenues jumped 900%. Unsurprisingly, the share price followed suit, and the stock was up nearly 3,000% within nine months!

But for anyone who invested at that peak, their position currently has a -75% loss because the penny stock has since collapsed. As impressive as the surging revenue was, the vast majority came from a single contract with a single customer that later terminated its relationship. Since then, Novacyt has made good progress in slowly replacing lost income with new clients. And over the long-term, it may even return to its short-lived glory. But that may be little comfort to those nursing big paper losses on the shares.

Penny stock trap #2: the one-trick pony

Beyond needing a diversified client list, I look for businesses with multiple sources of income. Why? Well, suppose a penny stock’s current or future revenue depends on a single project. In that case, all it takes is for that project to fail, and the company could collapse. Investors of Helium One Global know this all to well.

This young mining group operating out of Tanzania focused on extracting helium. With demand for the element rising from the medical and aerospace industries, investor hype was on the rise after the firm announced it may have found up to 138 billion cubic feet of the stuff.

Between March and August earlier this year, the penny stock surged over 300%, only to collapse by the end of the month. Once again, late investors suffered a giant red mark in their portfolio.

What happened? This serves as a perfect example of a single-asset risk. Despite releasing promising early data, the firm discovered that the gas was of poor quality when drilling began. And, consequently, this flagship project became unviable. That’s understandably disappointing, but there remains a chance of a potential comeback. The group did discover reservoir potential in an unexplored region that may allow Helium One to continue its mission to become a global helium supplier over the long term.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Intel (NASDAQ: INTC) share price surged on Wednesday after it announced plans to list its subsidiary Mobileye as a separate public company. This is Intel’s driver-assistance and autonomous driving technology business it bought in 2017 for just over $15bn.

Autonomous driving is an exciting sector, so it’s understandable why the Intel share price rose on the news. It does suggest that Mobileye was being undervalued by the market before the announcement of the planned initial public offering (IPO). Indeed, Intel stock has slumbered recently. Rival US companies AMD and Nvidia are both up in double-digits over one year, compared to less than +4% for Intel.

Does this mark a turning point for the Intel share price? Let’s take a look.

The business

Intel is best known for designing and manufacturing CPUs (central processing units). In fact, it’s a co-founder, Gordon Moore, whose now-famous law ‘Moore’s Law’ has driven the development of the computer chip industry for decades.

Today, Intel generates the majority of its revenue from selling advanced CPUs into the personal computing market. It also sells chips to the expanding data centre sector.

The IPO

The Intel share price was up over 6% at one point on Tuesday when the IPO for Mobileye was revealed. Apple recently announced plans to launch its own autonomous vehicle, so there’s a lot of interest in the sector.

I think Mobileye is potentially a better way to gain exposure to the expanding driverless car market in my portfolio. The company says over 40m cars have Mobileye technology already installed.

Intel said it will retain a majority stake in the business after the IPO, and use some of the proceeds it raises from selling Mobileye to build more manufacturing plants. This should really help its cash flow, and potentially lead to share buybacks.

I also view the share price rally as the market beginning to realise the value of Mobileye. As mentioned, Intel stock has stayed in single-digits this year as rival companies’ share prices have soared. It’s one of the cheapest stocks in the S&P 500 right now, on a forward price-to-earnings ratio of 10.

Is Intel stock a buy?

I’ve always viewed Intel as a quality company. It achieves operating margins of 30%+ and double-digit returns on its capital, two characteristics I look for when buying shares.

But the issue has been its poor growth, or complete lack of it. For example, revenue for this year is expected to decline by over 5%, and to stay approximately flat in 2022.

For additional context, Intel’s revenue forecast for this year is $74bn. This is almost three times Nvidia’s revenue forecast of $27bn. However, at time of writing, Intel’s market value is almost $214bn, and Nvidia’s is $810bn. Nvidia’s much higher forecast growth rates mean its market value is far higher than Intel’s. 

Intel has, therefore, struggled to grow in its core CPU market. This is a key risk to the business.

The IPO of Mobileye is a positive development, though. I’ll be taking a deeper look at this when it lists. But for now, Intel is staying on my watchlist until its growth rate improves.

Dan Appleby owns shares of Nvidia. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.