Large-cap stocks are foundational elements of every portfolio. These steady performers may not excite growth investors in the midst of a bull market. However, in periods of volatility, large-cap stocks act as a port in the storm.
Large-cap stocks offer investors some important benefits. First, by definition large-cap stocks are companies that have a market capitalization of $10 billion or more. This is an indication that the company has a mature business that carries less risk of having a significant downturn in business during economic downturns.
Second, large-cap stocks frequently pay dividends. These dividends offset the relatively slower growth in the company’s stock price and can lead to an impressive comprehensive total return. In several cases these companies have increased their dividends over a long period of time making them members of the Dividend Aristocrats or Dividend Kings club.
Large-cap stocks also give investors access to a significant amount of financial data. This makes it easy for investors to conduct their due diligence and understand how profitable an investment is likely to be.
In this special presentation, we’re giving you a look at seven large-cap stocks that have a bullish outlook at a time when the market is likely to remain volatile.
Quick Links
- Marathon Petroleum
- EOG Resources
- Best Buy
- UnitedHealth Group
- Texas Instruments
- Merck & Company
- Verizon Communications
#1 - Marathon Petroleum (NYSE:MPC)
What a difference a year makes. At this time last year, Marathon Petroleum (NYSE:MPC) was closing out a year that saw MPC stock drop approximately 31%. But opportunistic investors that bought the stock at a discount have been rewarded with a gain of nearly 56%, easily outpacing the performance of the S&P 500.
However, since its last earnings report, MPC stock is down about 4%. This may be a case of harvesting gains as the company nearly doubled revenue expectations. Plus the company is profitable once again. And with oil prices forecast to move higher in the next year, 2022 should be another good year for Marathon, which is one of the best-in-breed among oil stocks. Analysts give the stock a consensus price target of $72.58 which would be a gain of approximately 12%.
Marathon pays a quarterly dividend that currently has a yield of 3.68%. The company has increased its dividend in each of the last nine years.
About Marathon Petroleum
Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. The company operates through Refining & Marketing, and Midstream segments. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States; and purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services.
Read More - Current Price
- $159.38
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 10 Buy Ratings, 5 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $185.07 (16.1% Upside)
#2 - EOG Resources (NYSE:EOG)
Continuing in the oil and gas sector, we believe that EOG Resources (NYSE:EOG) is a strong large-cap stock to buy. This is a pure-play stock for the oil and gas industry. So if you’re buying it, you’re anticipating that inflationary pressures will remain. And given the recent remarks by the Federal Reserve that seems like a reasonable bet to make.
However, there’s more to like about EOG Resources then rising commodity prices. The company took aggressive cost-cutting measures in 2020 and 2021 and now that oil prices are back on the rise, much of those initiatives should appear on the company’s bottom line.
EOG stock is up 80% in 2021, but several analysts have boosted their price targets since the company’s last earnings report and forecast about 14% more stock price growth in the next year. The company has increased its dividend in each of the last five years.
About EOG Resources
EOG Resources, Inc, together with its subsidiaries, explores for, develops, produces, and markets crude oil, natural gas liquids, and natural gas primarily in producing basins in the United States, the Republic of Trinidad and Tobago and internationally. The company was formerly known as Enron Oil & Gas Company.
Read More - Current Price
- $136.23
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $142.30 (4.5% Upside)
#3 - Best Buy (NYSE:BBY)
If this was a presentation about stocks to buy right now, I’d stay away from Best Buy (NYSE:BBY). But we’re talking about stocks to hold for the long haul. That changes the conversation about BBY stock. This is a company that has successfully made the transformation from a destination brick-and-mortar store to an omnichannel giant that is a worthy competitor of Amazon (NASDAQ:AMZN).
In the early part of 2022, Best Buy has said margins will be under pressure which suggests they don’t believe they will successfully pass along any price increases to its end consumer. And like many companies, they are not immune from supply chain disruptions.
But at this point, investors can make the case that Best Buy is oversold. And analysts seem to agree, giving BBY stock a consensus price target of $133.92. That gives the stock a 34% upside in addition to a dividend that the company has increased for 18 consecutive years.
About Best Buy
Best Buy Co, Inc engages in the retail of technology products in the United States, Canada, and international. Its stores provide computing and mobile phone products, such as desktops, notebooks, and peripherals; mobile phones comprising related mobile network carrier commissions; networking products; tablets covering e-readers; smartwatches; and consumer electronics consisting of digital imaging, health and fitness products, portable audio comprising headphones and portable speakers, and smart home products, as well as home theaters, which includes home theater accessories, soundbars, and televisions.
Read More - Current Price
- $86.77
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 10 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $103.35 (19.1% Upside)
#4 - UnitedHealth Group (NYSE:UNH)
Healthcare stocks will continue to be among the best performers in 2022. And as investors hunt for quality, UnitedHealth Group (NYSE:UNH) should get strong consideration.
UnitedHealth is one of the largest companies in the field of managed care. This is expected to be a strong catalyst as hospitals and medical centers continue to recover from the pandemic closures.
And the company has also entered into an agreement to purchase Change Healthcare for $8 billion. The company recently announced this acquisition will not happen until April instead of February as previously thought. That may put the stock under pressure in the short term, but unless the SEC blocks the acquisition on antitrust concerns, this will be another catalyst for UNH stock.
UNH stock is up 43% in 2021 and is currently at the upper range of the analysts’ forecasts. However, in the last month, the stock has seen its price target boosted by a number of firms, most notably Goldman Sachs (NYSE:GS) that sees strong growth in the managed care business.
About UnitedHealth Group
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage, and health and well-being services to individuals age 50 and older addressing their needs; Medicaid plans, children's health insurance and health care programs; and health and dental benefits, and hospital and clinical services, as well as health care benefits products and services to state programs caring for the economically disadvantaged, medically underserved, and those without the benefit of employer-funded health care coverage.
Read More - Current Price
- $600.50
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $615.53 (2.5% Upside)
#5 - Texas Instruments (NASDAQ:TXN)
Texas Instruments (NASDAQ:TXN) gives investors an attractive option for capitalizing on the growth in semiconductor stocks. TXN stock hasn’t been the strongest performer in the chip sector in 2021. For example, the company’s 16% growth is below the 42% growth shown by the iShares Semiconductor ETF (NASDAQ:SOXX) which has climbed 42%.
One reason for this may be that Texas Instruments generates much of their revenue from the automotive sector. This was a volatile sector in 2021, but one that is likely to have significant upside in 2022.
However, investors who perform their due diligence will notice that the company received three bullish price target increases since it last reported earnings. This could push TXN stock up far higher than the 10% upside forecast by the current analysts’ estimates.
But again, this is a presentation about large-cap stocks. And that means that you’re trading a little growth for the consistent dividend. And Texas Instruments has increased its dividend in each of the last 18 years.
About Texas Instruments
Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers in the United States and internationally. The company operates through Analog and Embedded Processing segments. The Analog segment offers power products to manage power requirements across various voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage references, and lighting products.
Read More - Current Price
- $198.19
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 11 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $206.95 (4.4% Upside)
#6 - Merck & Company (NYSE:MRK)
Merck & Company (NYSE:MRK) is a best-in-breed pharmaceutical stock. However, the stock has been under-the-radar of some investors because it’s not part of the Covid-19 vaccine race. This was evident in the fact that MRK stock dropped 10% in 2020. Some of that is attributable to the company spinning off several of its business units, and the associated $6.5 billion in revenue, to a different company.
However, the company still has a strong performer in its oncology drug, Keytruda, which delivered a record $14 billion in revenue in 2020 and is on pace to do even better in 2021. Investors will certainly note that Keytruda has patent protection in the United States for another six years. And in the European Union and Japan the protections go even further.
Analysts have a consensus price target that gives MRK stock a 20% upside. The stock has paid out a dividend for the last 11 years.
About Merck & Co., Inc.
Merck & Co, Inc operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes under the Keytruda, Bridion, Adempas, Lagevrio, Belsomra, Simponi, and Januvia brands, as well as vaccine products consisting of preventive pediatric, adolescent, and adult vaccines under the Gardasil/Gardasil 9, ProQuad, M-M-R II, Varivax, RotaTeq, Live Oral, Vaxneuvance, Pneumovax 23, and Vaqta names.
Read More - Current Price
- $97.43
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $130.86 (34.3% Upside)
#7 - Verizon Communications (NYSE:VZ)
If you’re looking for a contrarian option as a large-cap stock for 2022, we offer Verizon Communications (NYSE:VZ). Verizon has the distinction of being among the “Dogs of the Dow” in 2021. This is a dubious distinction that goes to stocks that are the worst performers among the Dow Jones components. In the case of Verizon, the stock is down 10% in 2021.
So is there reason for optimism in 2022? The continued opportunity in 5G will likely be a catalyst. And the company will also continue to benefit from demand for its wireless products even as competition increases.
And investors will also be attempting to digest what the company’s recent announcement of a partnership with Vuzix means. It could make Verizon a picks-and-shovel play in the emerging metaverse, which would be something new for investors to consider.
Analysts give VZ stock a 13% upside from its current level. Verizon has increased its dividend in each of the last 17 years.
About Verizon Communications
Verizon Communications Inc, through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business).
Read More - Current Price
- $42.22
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $46.37 (9.8% Upside)
Many investors enjoy researching and selecting their own stocks. And we believe that the stocks in this presentation can be solid additions to any portfolio. However, many investors prefer a more “set it and forget it” approach.
In the case of large-cap stocks, this can lead them to index funds or exchange-traded funds that closely track the Russell 1000 Index. The Russell 1000 tracks 1,000 of the largest United States companies in terms of market capitalization.
There are many funds that track the Russell 1000. One of the best performing funds is the iShares Russell 1000 ETF (NYSEARCA:IWB). This is the largest growth fund that tracks the Russell 1000 with over $78 billion in assets. Another solid choice is the Vanguard Russell 1000 ETF (NYSEARCA:VONE). Both funds give investors broad exposure to a basket of large-cap stocks. And both funds pay quarterly dividends that can be automatically reinvested to contribute to the fund’s total return.
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