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3 Large-Cap Stocks to Buy for Safety, Growth and Dividends in Q4
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The market is coming off its best two-quarter stretch since 2009 after the coronavirus ended the historic bull run in March. Volatility did roar back in September and the Nasdaq fell into a correction in only several sessions.
Despite the decline and the up and down movement to end the third quarter, the S&P 500 is up roughly 50% from the March 23 lows, while the tech-heavy index is up around 62%. That said, the S&P 500 is down around 3% in the last month and it just fell back below its 50-day moving average.
Friday’s drop came after news broke that President Trump tested positive for the coronavirus. This could further complicate the next four weeks before the election and it likely adds to growing volatility and uncertainty. Trump is not the first major world leader to test positive, with his UK counterpart Boris Johnson one of the other more high-profile cases.
Meanwhile, the U.S. economic recovery showed signs of a slowdown in September, with only 661,000 jobs added. This marked the first time since April that net hiring came in below 1 million. On the positive side, the economy has recovered 11.4 million of the 22 million jobs lost in the early months of the virus, with the unemployment rate falling to 7.9%, which puts it more in line with past recession levels.
Clearly, we are still above the 3.5% jobless rate before the coronavirus and sectors such as travel and hospitality might take even longer to recover. But the U.S. economy has come a long way pretty quickly.
This means that investors with longer-term outlooks might still want to buy stocks, especially given the Fed’s decision to keep its interest rate pinned near zero through at least 2023.
Today we explore a few large-cap stocks with solid growth outlooks that also pay a dividend to help combat the low yield environment that investors might want to consider in the fourth quarter and beyond…
Best Buy has been a beneficiary of remote work and schooling, as people raced to purchase laptops, tablets, and more to adapt to an environment that could be here for a while. The consumer electronics powerhouse topped Q2 estimates for the period ended on August 1, with sales up 4% and adjusted earnings up 58%.
BBY’s domestic comparable sales popped 5%, with comparable online sales up 242%. This growth came despite the fact that Best Buy’s stores were open by appointment only for the first six weeks of the quarter. And consumers began to spend money on larger appliances as its stores returned to normal operations.
Zacks estimates call of BBY’s adjusted Q3 EPS to jump 47% on 11% stronger sales. The retailer’s top and bottom line expansion is expected to continue in the fourth quarter and beyond. And its adjusted earnings outlook has improved significantly since its release to help Best Buy grab a Zacks Rank #1 (Strong Buy) right now, alongside its “B” grade for Value and an “A” for Growth in our Style Scores system.
BBY’s ability to grow during these tough times and showcase its ability to fight back against Amazon’s (AMZN - Free Report) encroachment via its own beefed up e-commerce offerings has helped boost its stock price. Best Buy stock is up nearly 30% in 2020 to triple its industry’s climb. This is part of a much larger run over the last five years that’s seen BBY more than double the S&P 500.
Best Buy’s climb helps its 1.96% dividend yield, which tops the S&P 500’s average and the 30-year Treasury’s 1.46%, look all the better since it’s not inflated by a falling stock price. Best Buy also trades at a solid discount against its highly-ranked industry.
Investors might want to consider BBY for its ability to grow in the remote landscape and for years to come, as consumer electronics proliferate. Shares of Best Buy currently rest about 5% off their highs.
Target, like Walmart (WMT - Free Report) , has gone all-in on e-commerce, with various same-day offerings that helped it thrive during the first six months of the pandemic. TGT has also invested in a strategic brick-and-mortar approach that will likely continue to pay off for years since e-commerce accounted for only 16% of total U.S. retail sales in Q2—up from 10.8% in Q2 FY19.
The Minneapolis-based retailer’s Q1 sales jumped 11%, with Q2 sales up 25%. TGT’s digital comps soared 195%, while also posting one of its strongest quarters of in-store comps. And Target’s operating margin climbed from 7% in Q2 FY19 to 10%, which comes in well above Walmart and Amazon.
TGT’s adjusted Q3 earnings are projected to jump 10.3% on 10% stronger sales, with its adjusted FY20 earnings expected to jump 12% on 12.4% higher revenue. Target has also seen its bottom-line revisions surge since its last report to help it earn a Zacks Rank #1 (Strong By) right now.
Target shares have already bounced back from the market downturn. TGT, which is up 170% in the last three years, has jumped over 9% in the last month to new highs and was up Friday despite the broader decline. This comes as Wall Street dives into stocks that are the most resilient to the current economic climate.
Investors should also be pleased to know that Target trades at a discount, as it has for years, to its industry and its peer group. Target’s 1.70% dividend yield tops Walmart, with its next payout of $0.68 a share payable on December 10 to shareholders of record at the close of business November 18.
In the end, TGT has kept and attracted younger consumers, unlike department stores, through trendy and affordable furniture, home décor, fashion, and food. Therefore, it seems like a solid buy-and-hold candidate.
Since cutting ties with Amazon, FedEx has focused on doing business with all of the other major players in retail like Walmart. Along with improving its e-commerce unit, the Memphis, Tennessee-based firm is bolstering its automation efforts and modernizing its Express air fleet. The long-term plan is to attract more e-commerce and business-to-consumer clients, while remaining a business-to-business heavy operation.
FDX smashed our adjusted Q1 FY21 earnings estimate by nearly 90% in mid-September, up 60% from the year-ago period. The firm’s revenue jumped over 13% to $19.3 billion for the three-month period ended on August 31, which marked its strongest sales growth since Q4 FY17. FedEx’s ground segment jumped during the summer months, as consumers continued their massive digital shopping sprees.
FedEx now expects the overall U.S. market will hit 100 million packages per day by calendar year 2023, down from its pre-Covid projection of 2026. FDX projects that 96% of this anticipated growth will come from e-commerce. In the near-term, it plans to hire as many as 70,000 seasonal holiday workers, up from around 55,000 in previous years and roll out extra fees, mostly aimed at large customers, during the high-traffic season to offset costs and manage volume.
Zacks estimates call for FDX’s Q2 earnings to surge 51% on 11% stronger sales. FedEx’s earnings outlook continues to improve, with its consensus figures up higher in the last seven days to help it land a Zacks Rank #1 (Strong Buy). FDX also rocks “A” grades for Growth and Momentum and its Transportation - Air Freight and Cargo industry rests in the top 2% of over 250 Zacks industries.
The stock has soared 70% in 2020 and 16% in the last month. Lastly, FedEx’s 1.07% dividend yield tops the 10-year U.S. Treasury.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Shutterstock
3 Large-Cap Stocks to Buy for Safety, Growth and Dividends in Q4
The market is coming off its best two-quarter stretch since 2009 after the coronavirus ended the historic bull run in March. Volatility did roar back in September and the Nasdaq fell into a correction in only several sessions.
Despite the decline and the up and down movement to end the third quarter, the S&P 500 is up roughly 50% from the March 23 lows, while the tech-heavy index is up around 62%. That said, the S&P 500 is down around 3% in the last month and it just fell back below its 50-day moving average.
Friday’s drop came after news broke that President Trump tested positive for the coronavirus. This could further complicate the next four weeks before the election and it likely adds to growing volatility and uncertainty. Trump is not the first major world leader to test positive, with his UK counterpart Boris Johnson one of the other more high-profile cases.
Meanwhile, the U.S. economic recovery showed signs of a slowdown in September, with only 661,000 jobs added. This marked the first time since April that net hiring came in below 1 million. On the positive side, the economy has recovered 11.4 million of the 22 million jobs lost in the early months of the virus, with the unemployment rate falling to 7.9%, which puts it more in line with past recession levels.
Clearly, we are still above the 3.5% jobless rate before the coronavirus and sectors such as travel and hospitality might take even longer to recover. But the U.S. economy has come a long way pretty quickly.
This means that investors with longer-term outlooks might still want to buy stocks, especially given the Fed’s decision to keep its interest rate pinned near zero through at least 2023.
Today we explore a few large-cap stocks with solid growth outlooks that also pay a dividend to help combat the low yield environment that investors might want to consider in the fourth quarter and beyond…
Best Buy (BBY - Free Report)
Best Buy has been a beneficiary of remote work and schooling, as people raced to purchase laptops, tablets, and more to adapt to an environment that could be here for a while. The consumer electronics powerhouse topped Q2 estimates for the period ended on August 1, with sales up 4% and adjusted earnings up 58%.
BBY’s domestic comparable sales popped 5%, with comparable online sales up 242%. This growth came despite the fact that Best Buy’s stores were open by appointment only for the first six weeks of the quarter. And consumers began to spend money on larger appliances as its stores returned to normal operations.
Zacks estimates call of BBY’s adjusted Q3 EPS to jump 47% on 11% stronger sales. The retailer’s top and bottom line expansion is expected to continue in the fourth quarter and beyond. And its adjusted earnings outlook has improved significantly since its release to help Best Buy grab a Zacks Rank #1 (Strong Buy) right now, alongside its “B” grade for Value and an “A” for Growth in our Style Scores system.
BBY’s ability to grow during these tough times and showcase its ability to fight back against Amazon’s (AMZN - Free Report) encroachment via its own beefed up e-commerce offerings has helped boost its stock price. Best Buy stock is up nearly 30% in 2020 to triple its industry’s climb. This is part of a much larger run over the last five years that’s seen BBY more than double the S&P 500.
Best Buy’s climb helps its 1.96% dividend yield, which tops the S&P 500’s average and the 30-year Treasury’s 1.46%, look all the better since it’s not inflated by a falling stock price. Best Buy also trades at a solid discount against its highly-ranked industry.
Investors might want to consider BBY for its ability to grow in the remote landscape and for years to come, as consumer electronics proliferate. Shares of Best Buy currently rest about 5% off their highs.
Target (TGT - Free Report)
Target, like Walmart (WMT - Free Report) , has gone all-in on e-commerce, with various same-day offerings that helped it thrive during the first six months of the pandemic. TGT has also invested in a strategic brick-and-mortar approach that will likely continue to pay off for years since e-commerce accounted for only 16% of total U.S. retail sales in Q2—up from 10.8% in Q2 FY19.
The Minneapolis-based retailer’s Q1 sales jumped 11%, with Q2 sales up 25%. TGT’s digital comps soared 195%, while also posting one of its strongest quarters of in-store comps. And Target’s operating margin climbed from 7% in Q2 FY19 to 10%, which comes in well above Walmart and Amazon.
TGT’s adjusted Q3 earnings are projected to jump 10.3% on 10% stronger sales, with its adjusted FY20 earnings expected to jump 12% on 12.4% higher revenue. Target has also seen its bottom-line revisions surge since its last report to help it earn a Zacks Rank #1 (Strong By) right now.
Target shares have already bounced back from the market downturn. TGT, which is up 170% in the last three years, has jumped over 9% in the last month to new highs and was up Friday despite the broader decline. This comes as Wall Street dives into stocks that are the most resilient to the current economic climate.
Investors should also be pleased to know that Target trades at a discount, as it has for years, to its industry and its peer group. Target’s 1.70% dividend yield tops Walmart, with its next payout of $0.68 a share payable on December 10 to shareholders of record at the close of business November 18.
In the end, TGT has kept and attracted younger consumers, unlike department stores, through trendy and affordable furniture, home décor, fashion, and food. Therefore, it seems like a solid buy-and-hold candidate.
FedEx (FDX - Free Report)
Since cutting ties with Amazon, FedEx has focused on doing business with all of the other major players in retail like Walmart. Along with improving its e-commerce unit, the Memphis, Tennessee-based firm is bolstering its automation efforts and modernizing its Express air fleet. The long-term plan is to attract more e-commerce and business-to-consumer clients, while remaining a business-to-business heavy operation.
FDX smashed our adjusted Q1 FY21 earnings estimate by nearly 90% in mid-September, up 60% from the year-ago period. The firm’s revenue jumped over 13% to $19.3 billion for the three-month period ended on August 31, which marked its strongest sales growth since Q4 FY17. FedEx’s ground segment jumped during the summer months, as consumers continued their massive digital shopping sprees.
FedEx now expects the overall U.S. market will hit 100 million packages per day by calendar year 2023, down from its pre-Covid projection of 2026. FDX projects that 96% of this anticipated growth will come from e-commerce. In the near-term, it plans to hire as many as 70,000 seasonal holiday workers, up from around 55,000 in previous years and roll out extra fees, mostly aimed at large customers, during the high-traffic season to offset costs and manage volume.
Zacks estimates call for FDX’s Q2 earnings to surge 51% on 11% stronger sales. FedEx’s earnings outlook continues to improve, with its consensus figures up higher in the last seven days to help it land a Zacks Rank #1 (Strong Buy). FDX also rocks “A” grades for Growth and Momentum and its Transportation - Air Freight and Cargo industry rests in the top 2% of over 250 Zacks industries.
The stock has soared 70% in 2020 and 16% in the last month. Lastly, FedEx’s 1.07% dividend yield tops the 10-year U.S. Treasury.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>