With 2015 having delivered a lackluster show on the stock exchange, year 2016 initially seemed in no mood for change. The market saw a rocky start into the year with the S&P 500 and the Dow Jones Industrial Average (DJI) indices witnessing a mild plunge in their year-to-date performance. The Nasdaq Composite Index though is trading in the green. Nevertheless, things are not as grim as they appear.
A quick look at the U.S. stock market’s current position will reveal a certain degree of stability prevailing over the last one month. Evidently, the DJI rose 4.9% over the past month. The S&P 500 too edged up 4.3% and Nasdaq Composite gained 4.2% over the same time frame.
In fact, the road ahead looks bright. Analysts are currently expecting further uptrend in the stock market, at least in the coming few months, buoyed by a number of optimistic factors forming roots in the economy at present. For starters, a few analysts at Deutsche Bank believe that the U.S. job market, will remain solid this year – which in turn will lead to another dollar surge. They have predicted that if such optimistic U.S. data holds true through the rest of the year, the S&P 500 can rally up to a cheery 12% by 2016-end.
Accordingly, there are reasons enough for investors to make the most of this opportunity, right now, before the Fed once again hikes the interest rate (as expected) in June 2016. The key to profitable returns in the long run, after all, lies in smart investing.
Making the right pick from a large gamut of stocks trading on the bourse is like looking for a needle in the haystack, especially if the focus is only on those that are expected to excel in the long run. Instead, we advise our investors to look at large-cap stocks as valuation-wise, such stocks have better prospects compared to their mid and small-cap peers.
Moreover, even if not substantially profitable in the near term, large-cap stocks have the potential of being the least affected in times of volatility. The S&P Developed LargeCap index rallied 5.11% in the past one month – this calls for an added impetus.
Given this backdrop, we hereby identify 4 large-cap stocks that also boast strong long-term earnings growth projection. Also, since these stocks happen to be cheap with low P/E values, they provide an easy entry point in the stock market at the moment.
Stocks to Pick
For the sake of simplicity, we hereby select four cheap stocks that bear a Zacks Rank #2 (Buy), have a market cap of more than $10 billion and a P/E value of 12 or less. These stocks also bear strong long-term earnings growth potential.
Hewlett Packard Enterprise Company HPE: Based in California, this enterprise offers technology solutions to business and public sector organizations. The company currently bears a
- P/E value of 9.34
- Market cap of $30.16 billion
- Long-term EPS growth rate of 5.02%
Korea Electric Power Corp. KEP: Based in South Korea, this integrated electric utility company generates, transmits and distributes electricity in Korea as well as overseas. The company currently bears a
- P/E value of 5.93.
- Market cap of $32.67 billion
- Long-term EPS growth rate of 25%
Synchrony Financial SYF: Based in Connecticut, this enterprise operates as a consumer financial services company in the U.S. The company currently bears a
- P/E value of 10.08.
- Market cap of $23.72 billion
- Long-term EPS growth rate of 8.9%
Xerox Corporation XRX: Based in Connecticut, this enterprise provides business process and document management solutions worldwide. The company currently bears a
- P/E value of 9.84.
- Market cap of $10.76 billion
- Long-term EPS growth rate of 10%
Conclusion
With the Fed deciding not to hike its interest rate at its meeting this March, at least for now, the stock market is currently on an optimistic drive. In this scenario, the greatest advantage of adding large-cap stocks to one’s portfolio is the stability they provide. So wait no more, and take your pick from our list of cheap but high-potential stocks that can create wonders for your investment portfolio.
Want to find the best stocks for 2016? Find out more information about the market-crushing Zacks Top 10 list here >>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment