Selecting stocks is easy when the market is bullish. It is also comparatively easier to find stocks in a bear market (people generally go for defensive plays). However, volatile markets like the one we are currently witnessing are the most difficult to judge and benefit from.
Domestic and Global Concerns
The U.S. economy faces several headwinds at the domestic as well as the global level. On the domestic front, real gross domestic product (GDP), adjusted for price changes, slowed to an annual rate of 1.5% in the third quarter of 2015, down from 3.9% growth recorded in the second quarter. The decline reflected a fall in private inventory investment, primarily in wholesale trade and in manufacturing.
Also, the Oct 28 release of the U.S. Federal Reserve reaffirmed the interest rate at 0–0.25%, though it acknowledged the increasing economic activity in the U.S. However, uncertainty toward the December rate hike decision continues to weigh on the overall market sentiment.
On the global level, slowdown in the Chinese economy remains the focal point. October marked the eighth consecutive month of factory activity contraction for the nation. Moreover, the persistent weakness in crude prices continues to affect companies as well as economies across the globe.
Playing It Safe with Large-Cap Stocks
Turbulent times like these hold pockets of opportunities for the intelligent investor. One might be tempted by small-cap stocks as they tend to show immense growth even with small market movements. But lack of key growth ingredients is always a concern for these stocks.
Large-cap stocks, on the other hand, generally do not promise much growth because of their ‘been-there-done-that’ status. These stocks have been in the industry for a long time, seen ups and downs, have grown and are sitting securely atop an industry. But it is this very experience and niche position that makes large-cap stocks the darlings of their respective industries, especially in volatile times like these.
Follow the Experts, Pick the Right Stocks
Given the insecurities looming large in the global markets, large-cap stocks are an ideal investment option for investors looking for performance stability. However, the large-cap universe is huge, and making the right pick is a daunting task. As such, it might be prudent to follow expert advice as it generally leads to more gain in less time.
Brokerage firms have a better understanding of stocks and their industries and hence, instinctively provide sound investment advice. Also, taking an average of all broker recommendations is a better idea as one must remember that no brokerage firm – not even the biggest or the best – can be 100% accurate all the time.
Based on the above logic, we have selected five large-cap stocks with a market capitalization of over $10 billion. Also, these stocks have a favorable Zacks Rank of #1 (Strong Buy) or 2 (Buy). The icing on the cake is that the majority of brokerage firms remain bullish on these industry-leading stocks.
5 Large-Cap Broker Favorites
Amazon.com, Inc. AMZN is one of the largest online retailers in the world. Although the company’s primary product line was books, it rapidly diversified into a host of other product categories. The company is the leading provider of cloud infrastructure as a service to enterprise customers and has increased focus on the platform approach.
Of the 29 brokers that rated the stock, about 83% are bullish on it. The company holds a Zacks Rank #2 and both its Growth and Momentum Score are ‘A.’
Starbucks Corporation SBUX is the leading retailer of specialty coffee in the world. The company enjoys healthy fundamentals — strong global retail footprint, successful innovations, best-in-class loyalty program and digital offerings along with rapid growth in international markets. A range of sales drivers and cost-saving initiatives continue to back its strong revenue growth.
Of the 24 brokers that rated the stock, about 83% are bullish on it. The company has a Zacks Rank #2, Growth Score of ‘A’ and Momentum Score of ‘B.’
Cognizant Technology Solutions Corporation CTSH is one of the top providers of information technology, consulting and business process outsourcing services. Cognizant is expected to benefit from the strong demand for high quality as well as its lower cost technology services. Over the past few years, the company has outpaced several peers on greater exposure to the fast-growing verticals like Financial Services and Healthcare. The company is expected to continue to deliver strong growth and has also raised both the top-line and bottom-line guidance for this year.
Of the 18 brokers that rated the stock, about 94% are bullish on it. The company also holds a Zacks Rank #2, has a Growth Score of ‘B’ and Momentum Score of ‘B.’
Skyworks Solutions Inc. SWKS designs, manufactures and markets a broad range of high performance analog and mixed signal semiconductors that facilitate wireless connectivity. As demand for mobile Internet applications is exploding with the proliferation of smartphones and other forms of embedded wireless devices, Skyworks continues to gain traction. Based on order visibility, the company’s prospects look bright for the near future.
Of the 16 brokers that rated the stock, about 94% are bullish on it. The company also holds Zacks Rank #2 and both its Growth and Momentum Score are ‘A.’
Delta Air Lines, Inc. DAL is a leading scheduled air transportation provider for passengers and cargo throughout the U.S. and around the world. Since oil prices are expected to remain soft for quite some time ahead, Delta should continue to witness an upside. This is because fuel costs account for a major chunk of an airline's operating expenses.
All of the 12 brokers that rated the stock are bullish on it. The company also has a Zacks Rank #2 and both its Growth and Momentum Score are ‘B.’
Making Safer Bets
The markets are likely to be volatile for the remainder of this year. Rather than waiting for the markets to stabilize, investors should exploit the current opportunities with the above-mentioned stocks. These large-cap broker favorites are expected to make solid portfolio additions on strong fundamentals and value metrics.
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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
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