U.S. equity markets began 2022 with a bang, and RBC Capital Markets shared its top picks to kick off the year. "Our US Equity Strategy team expects 2022 to be a year of solid but more moderate returns relative to 2021, supported by a strong economic, earnings, and cash deployment backdrop," RBC's global head of research Graeme Pearson said in a note Tuesday. The S & P 500 returned nearly 27% in 2021. The benchmark and the Dow Jones Industrial Average closed at records on Monday, the first trading day of 2022. Despite economic headwinds, RBC believes corporate strength will keep stocks on an upward trajectory. "While COVID, inflation, labor, supply chain, pricing power and regulation remain key issues in focus, our industry analysts are generally confident in their companies' ability to manage through challenges including Omicron," Pearson said. Analysts every quarter update a list of their top high-conviction, long-term stock ideas. Take a look at five names on the list for 2022. The firm is particularly bullish on the financial, energy and technology sectors on a 6- to 12-month view, according to the note. Mastercard is a new addition to the list this quarter. RBC has an outperform rating on the stock. "Mastercard remains one of our best ideas in the space given our belief that investors should look to focus on long-term, secular-driven stories that provide solid organic growth with opportunities for margin expansion," analyst Daniel Perlin said. ConocoPhillips also made RBC's list. The firm said ConocoPhillips shares should outperform large-cap exploration and production peers. "COP offers a returns-focused value proposition, a strong balance sheet, and peer-leading distributions. The company appears well positioned to maintain competitive FCF (free cash flow) generation through various commodity price cycles," analyst Scott Hanold said. Also on the list is cloud communications platform Twilio . "With the pandemic accelerating digital transformation, every company is increasingly realizing technology is tablestakes, serving as a strong tailwind to Twilio. We believe Twilio plays a crucial role in allowing companies to communicate with customers across all channels," RBC's Rishi Jaluria said. Amazon and M & T Bank are among the other top ideas from RBC. —CNBC's Michael Bloom contributed to this report.
Mastercard credit cards.
Benoit Tessier | Reuters
U.S. equity markets began 2022 with a bang, and RBC Capital Markets shared its top picks to kick off the year.