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Stimulus or No Stimulus, These Large Caps Are Must Buys
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Major U.S. indices, namely, the Dow Jones Industrial, the S&P 500 and the Nasdaq witnessed a disappointing week ended Dec 11 due to confusion over further stimulus and a spike in the number of coronavirus infections and deaths across the United States.
Moreover, growing uncertainty over a post-Brexit trade deal between the United Kingdom and the European Union roiled markets.
Notably, the Dow Jones Industrial, the S&P 500 and the Nasdaq declined 0.6%, 1% and 0.7%, respectively, in the week.
Markets are expected to remain choppy this week on the backdrop of Federal Reserve’s Federal Open Market Committee (FOMC) meeting, its final in 2020 (Dec 15-16), and a slew of economic data, including retail sales.
Nonetheless, stimulus-related discussion is expected to remain in the limelight particularly following the disappointing November job reports that reflected how the U.S. labor market is losing steam.
Per the U.S. Bureau of Labor statistics data, total non-farm payroll employment rose 245,000 in November, much slower compared with the 610,000 added in October.
Stimulus Plan Remains in Limbo
A second stimulus remains in jeopardy despite support from both President Donald Trump and President-elect Joe Biden.
Markedly, on Dec 8, Treasury Secretary Steve Mnuchin tweeted about a new stimulus package worth $916 billion which is larger than the $908-billion bipartisan proposal. Mnuchin’s plan includes money for state and governments and liability protection for businesses, schools and universities.
Regarding stimulus checks, Trump’s administration offered $600 per person and $600 per child in lieu of $300 weekly unemployment benefits. Notably, the $908-billion bipartisan proposal didn’t include a second stimulus check, per cnet.
The bipartisan group now plans to split the package into two separate proposals -- $748 billion, which includes money for small business loans, jobless benefits and vaccine distribution and another $160 billion for state and local aid that includes liability protections for businesses and other entities.
Markedly, Senators Josh Hawley and Bernie Sanders have teamed up to offer $1,200 check in direct payment for individuals earning up to $75K. Markedly, House of Representatives Speaker Nancy Pelosi, who also supports another $1,200 stimulus, expects stimulus-related negotiations to continue through Christmas.
While the dilly dally over a second stimulus is nerve-wrecking for investors, we believe there are positives in the market to drive the next rally. Pfizer’s coronavirus vaccine emergency use approval by the U.S. FDA and lower unemployment rate are noteworthy. Markedly, unemployment rate fell to 6.7% in November compared with October’s 6.9%. This was also better than Fed’s year-end expectation of 7.6%, offered in September.
Our Picks
Here we pick five large-cap stocks (market cap greater than $10 billion) that have enough potential and room to grow further amid the confusion created by the stimulus-related discussions. Large caps have strong fundamentals that help them stay afloat in a turbulent economic and business environment.
Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Year-to-Date Performance
L Brands is riding on sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives. Furthermore, the company’s focus on tapping international markets opens up long-term growth opportunities.
L Brands currently flaunts a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for this $11-billion company’s fiscal 2021 earnings is pegged at $2.30 per share, having moved 81.1% north in the past 30 days. For fiscal 2022, the consensus mark for earnings has moved up 33.2% to $2.81 per share over the same time frame.
The Trade Desk (TTD - Free Report) is benefiting from the momentum in programmatic ad buying. Furthermore, the emergence of digital content has boosted the usage of this $43.50-billion company’s inventory across all forms of ConnectedTV (“CTV”). Also, a recovering ad demand and spending scenario is likely to boost the top line.
The Trade Desk currently flaunts a Zacks Rank of 1 and a Growth Score of A. The Zacks Consensus Estimate for 2020 earnings is pegged at $4.44 per share, having been revised 5% upward in 30 days’ time. For 2021, the consensus mark for earnings has moved 2% north to $4.58 per share over the same time frame.
IDEXX Laboratories (IDXX - Free Report) is riding on robust performance of its Companion Animal Group (CAG) that generates bulk of its revenues. Strength in clinical visits continued to aid CAG Diagnostics’ recurring revenues. Moreover, strong international growth is noteworthy. This $38.92-billion company’s newest reference lab in Kornwestheim, Germany, is fully functional now and is currently serving across Europe. Further, the announcement of ProCyte One Hematology Analyzer has been favorably received by customers.
IDEXX currently flaunts a Zacks Rank of 1 and a Growth Score of B. The Zacks Consensus Estimate for its 2020 earnings is pegged at $6.13 per share, having moved 1.7% north in the past 30 days. For 2021, the consensus mark for earnings has moved up 0.6% to $6.83 per share during the same time frame.
NVIDIA (NVDA - Free Report) is benefiting from the pandemic-induced work-from-home and learn-at-home wave. This Zacks Rank #2 company, with a Growth Score A, has witnessed solid demand for GeForce desktop and notebook GPUs, which is boosting gaming revenues. Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business. Expansion of NVIDIA GeForce NOW is expected to fortify the user base.
NVIDIA has a market cap of $322.21 billion. The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $9.66 per share, having been revised 5.8% upward in 30 days’ time. For fiscal 2022, the consensus mark for earnings has moved 4.1% north to $11.48 per share over the same time frame.
CrowdStrike Holdings (CRWD - Free Report) is benefiting from rising demand for cyber-security solutions owing to the slew of data breaches and increasing necessity for security and networking products amid the COVID-19 pandemic-led remote working trend.
Moreover, continued digital transformation and cloud-migration strategies adopted by organizations are key growth drivers for this Zacks Rank #2 company. CrowdStrike’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps in adding users.
CrowdStrike has a Growth Score B and market cap of $38.61 billion. The consensus mark for its 2020 bottom line is pegged at 22 cents per share, up a whopping 266.7% in the past 30 days. For 2021, the consensus mark for earnings has moved 39.1% north to 32 cents per share over the same time frame.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Stimulus or No Stimulus, These Large Caps Are Must Buys
Major U.S. indices, namely, the Dow Jones Industrial, the S&P 500 and the Nasdaq witnessed a disappointing week ended Dec 11 due to confusion over further stimulus and a spike in the number of coronavirus infections and deaths across the United States.
Moreover, growing uncertainty over a post-Brexit trade deal between the United Kingdom and the European Union roiled markets.
Notably, the Dow Jones Industrial, the S&P 500 and the Nasdaq declined 0.6%, 1% and 0.7%, respectively, in the week.
Markets are expected to remain choppy this week on the backdrop of Federal Reserve’s Federal Open Market Committee (FOMC) meeting, its final in 2020 (Dec 15-16), and a slew of economic data, including retail sales.
Nonetheless, stimulus-related discussion is expected to remain in the limelight particularly following the disappointing November job reports that reflected how the U.S. labor market is losing steam.
Per the U.S. Bureau of Labor statistics data, total non-farm payroll employment rose 245,000 in November, much slower compared with the 610,000 added in October.
Stimulus Plan Remains in Limbo
A second stimulus remains in jeopardy despite support from both President Donald Trump and President-elect Joe Biden.
Markedly, on Dec 8, Treasury Secretary Steve Mnuchin tweeted about a new stimulus package worth $916 billion which is larger than the $908-billion bipartisan proposal. Mnuchin’s plan includes money for state and governments and liability protection for businesses, schools and universities.
Regarding stimulus checks, Trump’s administration offered $600 per person and $600 per child in lieu of $300 weekly unemployment benefits. Notably, the $908-billion bipartisan proposal didn’t include a second stimulus check, per cnet.
The bipartisan group now plans to split the package into two separate proposals -- $748 billion, which includes money for small business loans, jobless benefits and vaccine distribution and another $160 billion for state and local aid that includes liability protections for businesses and other entities.
Markedly, Senators Josh Hawley and Bernie Sanders have teamed up to offer $1,200 check in direct payment for individuals earning up to $75K. Markedly, House of Representatives Speaker Nancy Pelosi, who also supports another $1,200 stimulus, expects stimulus-related negotiations to continue through Christmas.
While the dilly dally over a second stimulus is nerve-wrecking for investors, we believe there are positives in the market to drive the next rally. Pfizer’s coronavirus vaccine emergency use approval by the U.S. FDA and lower unemployment rate are noteworthy. Markedly, unemployment rate fell to 6.7% in November compared with October’s 6.9%. This was also better than Fed’s year-end expectation of 7.6%, offered in September.
Our Picks
Here we pick five large-cap stocks (market cap greater than $10 billion) that have enough potential and room to grow further amid the confusion created by the stimulus-related discussions. Large caps have strong fundamentals that help them stay afloat in a turbulent economic and business environment.
Moreover, these stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Year-to-Date Performance
L Brands is riding on sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives. Furthermore, the company’s focus on tapping international markets opens up long-term growth opportunities.
L Brands currently flaunts a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for this $11-billion company’s fiscal 2021 earnings is pegged at $2.30 per share, having moved 81.1% north in the past 30 days. For fiscal 2022, the consensus mark for earnings has moved up 33.2% to $2.81 per share over the same time frame.
The Trade Desk (TTD - Free Report) is benefiting from the momentum in programmatic ad buying. Furthermore, the emergence of digital content has boosted the usage of this $43.50-billion company’s inventory across all forms of ConnectedTV (“CTV”). Also, a recovering ad demand and spending scenario is likely to boost the top line.
The Trade Desk currently flaunts a Zacks Rank of 1 and a Growth Score of A. The Zacks Consensus Estimate for 2020 earnings is pegged at $4.44 per share, having been revised 5% upward in 30 days’ time. For 2021, the consensus mark for earnings has moved 2% north to $4.58 per share over the same time frame.
IDEXX Laboratories (IDXX - Free Report) is riding on robust performance of its Companion Animal Group (CAG) that generates bulk of its revenues. Strength in clinical visits continued to aid CAG Diagnostics’ recurring revenues. Moreover, strong international growth is noteworthy. This $38.92-billion company’s newest reference lab in Kornwestheim, Germany, is fully functional now and is currently serving across Europe. Further, the announcement of ProCyte One Hematology Analyzer has been favorably received by customers.
IDEXX currently flaunts a Zacks Rank of 1 and a Growth Score of B. The Zacks Consensus Estimate for its 2020 earnings is pegged at $6.13 per share, having moved 1.7% north in the past 30 days. For 2021, the consensus mark for earnings has moved up 0.6% to $6.83 per share during the same time frame.
NVIDIA (NVDA - Free Report) is benefiting from the pandemic-induced work-from-home and learn-at-home wave. This Zacks Rank #2 company, with a Growth Score A, has witnessed solid demand for GeForce desktop and notebook GPUs, which is boosting gaming revenues. Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business. Expansion of NVIDIA GeForce NOW is expected to fortify the user base.
NVIDIA has a market cap of $322.21 billion. The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $9.66 per share, having been revised 5.8% upward in 30 days’ time. For fiscal 2022, the consensus mark for earnings has moved 4.1% north to $11.48 per share over the same time frame.
CrowdStrike Holdings (CRWD - Free Report) is benefiting from rising demand for cyber-security solutions owing to the slew of data breaches and increasing necessity for security and networking products amid the COVID-19 pandemic-led remote working trend.
Moreover, continued digital transformation and cloud-migration strategies adopted by organizations are key growth drivers for this Zacks Rank #2 company. CrowdStrike’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps in adding users.
CrowdStrike has a Growth Score B and market cap of $38.61 billion. The consensus mark for its 2020 bottom line is pegged at 22 cents per share, up a whopping 266.7% in the past 30 days. For 2021, the consensus mark for earnings has moved 39.1% north to 32 cents per share over the same time frame.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>