 (1000 × 600 px)-1649756630.png)
In our daily life, we often hear about the Stock Market which refers to a collection of marketplaces where shares of publicly traded firms can be bought, sold, and issued. But not all the stocks are not safe and good to invest. The best stocks are divided into Large-cap & blue-chip stocks.
Large-cap in stock market refers a market capitalization – or share price times shares outstanding – greater than $10 billion. Large-cap companies make up a large chunk of the stock market in the United States, and investors frequently use them as portfolio anchors. Large-cap stocks are expected to provide investors with comprehensive financial information, sector leadership, and, in many cases, high dividends.
In Stock Market, blue-chip stocks remain a leading option for portfolio construction. The returns on these stocks have tended to be more consistent and predictable. Companies having a long history of increasing earnings and dividends, as well as the ability to weather the rare downturn, are the most consistent long-term performers.
Here are the Best Large-Cap & Blue-Chip Stocks to Buy for 2022.
Index of Content
Apple is a well-known personal technology product designer, producer, and retailer. It's the definition of a large-cap stock, with a market capitalization of $2.8 trillion. Pandemic declines and rising interest rates have reduced investor enthusiasm for technology companies, with the broader industry group down around 10% year to date. Meanwhile, Apple has performed admirably in the face of adversity.
AAPL has risen by around 40% in the last year, and it has only declined by about 2% since the beginning of the year. Arizona became the first state to make its driver's license and state ID compatible with Apple Wallet in mid-March, and users may now display the app at TSA checkpoints, with many more states to follow.
Apple's years of stable profitability and growth may make it a real worth stock, but the company's continued deployment of highly prized, creative products still makes it a long-term growth play. Back Top
Amazon came on the front page when it announced a share repurchase worth $10 million and a 20-for-1 stock split designed to broaden the investor base. Consumer offerings including e-commerce and entertainment, as well as Amazon Web Services, AWS, are the company's two main business divisions.
While internet retail has suffered as pandemic limitations have been relaxed and inflationary headwinds abound, Amazon is well protected because of AWS. In 2021, AWS revenue increased by 37%, compared to 18% for its North American e-commerce division, and the company had a profit margin of 29.8%, compared to 2.6 percent for its North American business.
With the stock down 13% from its 52-week high on March 24, this could be a good opportunity to purchase the fall. Back Top
Exxon is the world's largest energy business, with a market valuation of around $350 billion. It operates through upstream, downstream, and chemical divisions.
The price of West Texas Intermediate crude has risen 20% in the last month as the Russia-Ukraine war raises demand for oil. Oil and gas stocks have outpaced the market for more than a year, with the S&P 500 Energy Index increasing more than 60% in that time.
Even so, Exxon has a low price-to-earnings ratio of 15 and has risen more than 30% since the beginning of the year. Exxon announced yearly cost reductions of $9 billion by 2026 through reorganization and simplification during its investor day in early March.
According to Scotiabank Global Equity Research analyst Paul Cheng, "structural cost savings are likely to counteract inflation and improve activity beyond 2023."
Back Top
Caterpillar is a company that designs and manufactures equipment for the construction, mining, energy, and transportation industries. It has a 97-year history. Companies will seek dump trucks, backhoes, excavators, engines, and other machinery as they grow capacities due to a lack of global inputs and increased investment in infrastructure and energy.
Caterpillar's cyclical association with the global industrial economy suggests that this large-cap company could have a lot of upside potential. Higher sales volume boosted revenue to $51 billion in 2021, up 22% from the previous year, while pretax income more than doubled.
Caterpillar also qualifies as a dividend aristocrat because it has grown its dividend for 27 years in a row and has a dividend yield of 2%.
"We believe CAT's earning capacity and free cash flow conversion over the next cycle, supported by steady global gross domestic product growth, continue to deserve our overweight rating," writes Tami Zakaria of JPMorgan Research. Back Top
Costco, which opened its first warehouse in 1976, has grown to become the country's largest operator of membership-only warehouses, providing individuals and small companies deep savings on everything from groceries to gadgets.
It has 114 million cardholders and a 92 percent renewal rate, making it the world's third-largest retailer. Costco leverages high-volume purchasing and efficient distribution to maintain better gross margins than typical shops by offering bulk merchandise placed on warehouse shelves.
Net sales increased 16.1% year over year to $51 billion in the second quarter of fiscal 2022, and net income increased to $1.3 billion.
"We believe COST remains a core holding because of its unrivaled value proposition (11 percent gross margins) to its fiercely loyal customer base and global growth opportunity (2-3 percent annually and likely double the current store base from here)," says JPMorgan research analyst Christopher Horvers. Back Top
Wells Fargo & Company is one of the major four American megabanks, with a market capitalization of almost $200 billion. WFC has risen more than 30% in the last year while maintaining an incredibly low price-earnings ratio of under 10.
Banks benefit from rising interest rates because interest income grows faster than depositors' interest payments. Net interest margin, often known as net interest income, or NII, is the principal source of revenue for most banks, accounting for over 46% of revenue in 2021. Morningstar senior equities analyst Eric Compton says,
"We anticipate that net interest margins will improve in 2022, 2023, and 2024 as a series of rate hikes occur, helping to fuel a roughly 10% compounded annual growth rate for NII over the next three years." Back Top
Media and entertainment, as well as parks, experiences, and products, are two divisions of Disney. Its media sector, which had $51 billion in revenue in fiscal 2021, holds a number of channels and streaming services, including ABC, ESPN, Disney+, and Hulu, as well as the rights to a number of films and television shows.
Disney+ surpassed Netflix Inc. (NFLX) in the streaming wars in the last three months of 2021, adding 11.8 million customers to Netflix's 8.3 million. Meanwhile, with COVID-19 restrictions nearly lifted in the United States, the theme parks segment generated $16.6 billion in sales in fiscal 2021.
This large-cap stock has a wide economic moat, according to Morningstar analysts, who have set a price objective of $170 per share, much above its current price of around $140. Back Top
Verizon is one of the three main mobile phone networks in the United States. In recent months, all three have suffered; VZ stock, for example, is only a few percentage points above its 52-week lows.
Verizon is the ideal option for both growth and income investors. In the midst of its convoluted corporate restructuring, AT&T Inc. (T) is slashing its dividend. T-Mobile US Inc. (TMUS), on the other hand, does not pay a dividend.
As a result, Verizon is the most secure option. The stock now pays a 5% dividend yield and is back to where it was in March 2020, at the peak of the COVID-19 sell-off.
Meanwhile, Verizon will begin to reap the advantages of the 5G rollout cycle at some point, and sentiment will begin to rise again. Meanwhile, the stock is trading at less than 10 times earnings. Back Top
Walmart was one of the only significant American corporations to maintain its value during the Great Recession. By the time the market bottomed in March 2009, an investor who acquired WMT shares at the market top in 2007 had made a tiny profit.
That's because Walmart is one of the most defensive blue-chip stocks available. When the economy slows, some customers are forced to downsize in order to get more bang for their buck.
Walmart, being the king of daily low pricing, can fulfill this requirement. Walmart had a boost in demand in 2020, but since then, profit margins have been squeezed by inflation and growing labor expenses.
Nevertheless, as the economy slows and gas costs rise, Walmart may be poised for another period of great outperformance. Back Top
Kimberly-Clark is a market leader in the production of toilet paper and other sanitary and hygiene goods. As toilet paper became a sought-after item in 2020, the firm saw exceptionally strong sales.
However, this inevitably resulted in a slowdown in 2021, as many individuals ended up with an excess of Kimberly-Clark items to work through, which took months. When you factor in rising material prices like wood pulp, Kimberly-earnings Clark's have fallen from their peak in 2020.
Analysts expect Kimberly-Clark to recover to pre-pandemic profitability levels in 2023, putting earnings at around $7 per share. That works out to a projected price-earnings ratio of just 17 times.
A strong dividend yield of 3.8 percent is also offered by the stock. Back Top
Bank stocks have been skyrocketing in recent months as interest rates have risen and the Federal Reserve's target rate has been raised. The stock of JPMorgan Chase, on the other hand, is doing the exact opposite.
The stock market has dropped roughly 20% from its recent highs. Traders appear to be more concerned about a slowing economy than the increased profit margins that would be available to banks.
That might be a fantastic chance for investors who missed the first rise in interest rates and wish to profit from them. The stock of JPMorgan Chase is now trading at around 10 times earnings. With interest rates rising, it should see a bump in earnings.
Strong activity in sectors like investment banking can also help to increase performance. In addition to its excellent starting price, the company currently offers a 2.9 percent dividend yield. Back Top
Home Depot is on the other side of JPMorgan Chase's interest rate trade. The stock of the top home improvement store has dropped more than 20% from recent highs. The theory is that when interest rates rise, the housing market would slow down, resulting in reduced Home Depot sales.
During the epidemic, the firm may have benefited from some one-time sales momentum since customers were stranded at home and had more time and money to spend on house renovations.
With all of this in mind, home renovation should continue to be a solid market. A large number of millennials, in particular, still require a home to call their own, which will keep the housing market stable.
And, with HD stock trading at roughly 20 times earnings, any slowdown in the housing sector is probably already included into the stock price. Back Top
In inflationary market circumstances, the Golden Arches provide investors two chances to win. First and foremost, it's a benefit of the same "trade down" impact that Walmart enjoys.
People are willing to pay $15 for lunch when the economy is doing well. However, when gas costs rise, many customers may return to more cost-effective dining options. McDonald's real estate interests are the other angle.
The corporation has real estate worth tens of billions of dollars, much of it is rented out to McDonald's franchisees. Real estate tends to appreciate swiftly during periods of high inflation, resulting in a significant increase in the value of McDonald's real estate empire.
It's not out of the question that activist investors may push McDonald's to split off its real estate holdings once more. Meanwhile, with the recent sell-off, the real running firm is selling for only 23 times profits. Back Top
The largest owner and operator of mobile phone towers and other telecom infrastructure assets in the world is American Tower. Verizon Communications, for example, uses an American tower site to send mobile signals to its consumers.
One of the most appealing aspects of American Tower is that it may frequently rent towers to up to three tenants at once, resulting in high profit margins due to the pooling of costs among several clients.
Skeptics would claim that American Tower is already too huge to go much farther, with over 220,000 locations throughout the world. It does, however, see prospects for development in growing areas such as Latin America.
Meanwhile, the deployment of 5G is driving increased demand in mature regions. The fact that American Tower pays a dividend that grows with each quarterly payment is a key component of its attraction. The current yield on the stock is 2.3 percent. Back Top
Besides these Visa Inc. (V) and Global Payments Inc. (GPN) are some other Blue-Chips that are best for investors to invest in 2022.
