The stock market continued its historic run Thursday as the NASDAQ Composite reached 9,000 for the first time. The S&P 500 also rose over 0.5% to a new all-time high, while the DJIA grew over 100 points. Consumer spending continued to anchor the economy as MasterCard (MA) reported a strong holiday season that was propelled by the digital marketplace.
As the consumer continues to display good overall health, some stocks look poised to reap the benefits in 2020. Let’s take a look at a few large cap stocks that will carry positive momentum into the new year.
Costco(COST - Free Report) is a company with a business model that can weather most twist and turns. The retailer has steadily maintained customer renewal rates around 90%, which is a testament to the continued success the firm has seen with its valued memberships. The treasure hunt nature of its giant warehouses keeps shoppers coming back to its stores to find the latest deals on almost any item imaginable.
Costco is coming off a first quarter where it saw its average transaction ticket rise 1.4% and its e-commerce sales jump over 5%. In addition to the recent success, Costco also pays out a dividend with a yield of 0.88%. The firm has also steadily raised its dividend for the better part of the past decade and has even paid out a special dividend recently.
Costco paid out a dividend of $7 per share in 2017, $5 per share in 2015, and $5 per share in 2012. Some investors believe that this special dividend may be paid out soon, which might make this an opportune time to pick up shares of the warehouse giant.
Our fiscal 2020 estimates call for a top-line increase of 6.5% to $162.7 billion and a bottom-line rally of 4.7% to $8.58 per share. Costco has seen its earnings revised higher, helping the stock earn a Zacks Rank #2 (Buy).
Tesla(TSLA - Free Report) is a stock that has put together a strong rally recently that can propel it into the new year. TSLA shares have risen over 62% since the company reported its third quarter results, where it reported $143 million in net income. The surprisingly profitable quarter for the company was followed by an announcement that stated it was on track to deliver at least 360,000 vehicles during 2019.
The electric vehicle manufacturer has also stoked investor optimism with its Gigafactory in China. Tesla is already making 1,000 Model 3s a week, according to a report from The Driven, which would put in on track to produce the 3,000 a week that Elon Musk expects once the factory is fully operational.
The company’s Gigafactory in China will be a key catalyst for years to come as Tesla attempts to expand its innovative products into the international market. In addition to its international endeavors, vehicle deliveries have soared, with trailing-12-month vehicle deliveries up an impressive 88%. Our 2020 consensus estimates call for earnings to soar over 1,200% to $5.73 per share and for net revenue to grow over 23% to $29.9 billion. Tesla has seen its earnings estimates revised higher giving the stock a Zacks Rank #2 (Buy).
Microsoft(MSFT - Free Report) is a blue-chip stock that has put together a spectacular year with its shares up over 56%. The tech juggernaut is coming off a quarter where it saw its bottom-line improve 21% and its top-line gain 14%. MSFT has made its cloud operations a focal point as the public cloud service market is projected to grow at an annual growth rate of 12.6% to $331.2B in 2022.
Microsoft saw its intelligent cloud segment grow over 26% in Q1 to $10.8 billion and also secured a $10 billion cloud contract from the Pentagon in late October. The company had to beat out rival cloud services firm Amazon (AMZN - Free Report) to earn the lucrative government contract. As the cloud computing market continues to mature, Microsoft will likely see substantial growth in its cloud computing business.
In addition to Microsoft’s cloud operations, it pays out a dividend with a yield of 1.3%. The company has lifted its dividend payouts for the better part of the last 10 years and will likely continue this trend going forward, given its healthy balance sheet.
Our fiscal 2019 estimates project a bottom-line hike of 12.6% to $5.35 per share and for its top-line to climb over 11% to $140.1 billion. The firm’s cloud segment is forecasted to rise over 20% to $47 billion. MSFT looks poised to cash in on the secular shift towards the cloud and currently sports a Zacks Rank #2 (Buy).
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