If you’re worried about volatility, mega-cap stocks might just be a viable solution.
For a lot of investors, the recent ups and downs of the start market can be a little jarring. Personally, I don’t mind the dips and valleys because every downturn is an opportunity to get good stocks at a discount.
But there are others who have a lower risk tolerance, I’m sure, and are looking for stocks to buy that have a built-in safety net.
One such avenue is the world of mega-cap stocks. Mega-cap stocks are those with a market capitalization of more than $200 billion. These are well-established companies that have a lot of money behind them.
Generally, mega-cap stocks are less volatile than small-cap stocks, which are more populated by growth companies. Mega-cap stocks already had one or more major growth spurts.
Of course, buying a mega-cap stock isn’t foolproof. There are still plenty of duds in the mega-cap world and as an investor, you have to know how to pick out the good from the bad. That’s where the Portfolio Grader comes in.
My free tool grades stocks on an “A” through “F” scale based on earnings performance, analyst sentiment, momentum and performance, among other factors.
If you’re looking for a stock you can buy and hold for a long time, then these mega-cap stocks fit the bill.
| LLY | Eli Lilly | $321.64 |
| XOM | Exxon Mobil | $110.75 |
| ASML | ASML Holding | $618.38 |
| CVX | Chevron | $162.41 |
| UNH | UnitedHealth Group | $484.33 |
| V | Visa | $219.55 |
| ABBV | AbbVie | $152.71 |
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) was one of the best pharma stocks on the market in 2022, rising 35%. While it’s down about 12% so far this year, investors shouldn’t be overly concerned.
In fact, they should be pretty excited, because this is a unique buying opportunity for a top mega-cap stock. Eli Lilly is ramping up production of its type 2 diabetes drug Mounjaro.
If the Food & Drug Administration signs off on Mounjaro also being used as an obesity drug, then LLY stock is going to take off again. UBS analyst Colin Bristow says obesity sales could bring $25 billion in revenue annually for Mounjaro.
LLY has a market cap of $311 billion and has an “A” rating in the Portfolio Grader.
Exxon Mobil (XOM)
Strong oil and gas prices in 2022 pushed Exxon Mobil (NYSE:XOM) stock to new highs.
Even though the price of oil dropped to less than $80 per barrel (from more than $100 in the first quarter of 2022), XOM stock is still riding high. It’s up 42% in the last 12 months.
One of the things I like best about Exxon is that it’s cutting its costs – in fact, its aggressive cost reduction plan has XOM on track to double earnings relative to 2019 by the year 2027. That’s going to help Exxon add to its dividend and buy back shares – actions that will reward investors.
Earnings for the fourth quarter continued the company’s track record of impressing analysts. XOM topped expectations with revenue of $95.43 billion and earnings per share of $3.40, beating expectations of $90.77 billion in revenue and EPS of $3.28.
Exxon has a market cap of $450 billion and carries an “A” rating in the Portfolio Grader.
ASML Holding (ASML)
You may not know about ASML Holding (NASDAQ:ASML), but you’ve likely benefited from its products.
The Netherlands-based company is the sole manufacturer of extreme lithography photolithography machines that are used to make the most advanced semiconductor chips.
The company claims that its customer includes all the major chipmakers – so if you’re looking for semiconductor stocks, ASML should definitely be on your list.
And while the company has been battling supply chain woes that delayed some production starts, and more recently is seeing rising inflation cut into profit margins, ASML continues to churn out impressive returns.
Revenue and earnings per share for the fourth quarter beat analysts’ expectations, coming in at $6.43 billion and $4.60 per share, versus estimates of $6.35 billion and $4.33 per share.
With a market cap of $257 billion, ASML stock is up 21% in the last six months. It has a “B” rating in the Portfolio Grader.
Chevron (CVX)
Another of the major oil and gas conglomerates, Chevron (NYSE:CVX) enjoys many of the same tailwinds as Exxon Mobil.
The company’s bringing in big quarterly earnings as of late on the strength of the high price of oil and pressures in the natural gas market.
Earnings for 2022 were a whopping $35.5 billion, compared to $15.6 billion in 2021. Investors got paid, too. Chevron paid out $11 billion in dividends and returned another $11.25 billion back to shareholders in the form of share buybacks.
Chevron stock is up 16% in the last year, and analysts think it’s got another 20% upside with a consensus price target of $194. Chevron has a market cap of $313 billion, and currently rates a “B” grade in the Portfolio Grader.
UnitedHealth Group (UNH)
Minnesota-based UnitedHealth Group (NYSE:UNH) has the distinction of being the largest health insurance company in the U.S. It serves 129 million customers through its Optum segment and another 51 million customers with the United Healthcare segment.
Health insurance is a key segment for investors who are looking for long-term growth and stability. The U.S. population is aging, with the percentage of people older than 65 expected to increase from 16% in 2019 to 21.6% by 2040.
If you’re concerned about volatility in the stock market, health insurance is a good place to be. In the last three pre-pandemic recessions, the S&P 500 declined an average of 27%, but the S&P 500 Health Care Index rose by 14.2% in those periods.
Earnings for the fourth quarter were $82.79 billion, beating expectations for $82.53 billion. EPS was also a pleasant surprise, coming in at $5.34 per share versus expectations of $5.17.
UNH has a market cap of $459 billion and has a “B” rating in the Portfolio Grader.
Visa (V)
Visa (NYSE:V) makes its money by collecting fees from banks and other financial institutions to issue credit, debit and prepaid cards, and it collects money from merchants based on the volume of goods and services bought with Visa cards.
So it makes its money on both ends of the transaction. Visa is one of the best-known payment processors in the world, connecting merchants to customers in more than 200 countries.
Earnings in the fourth quarter were another win – revenue of $7.94 billion and EPS of $2.18 beat analysts’ forecasts for $7.7 billion revenue and $2.01 EPS.
Visa has a market cap of $464 billion and the stock is up 6% in the last six months. It currently has a “B” rating in the Portfolio Grader.
AbbVie (ABBV)
Biopharmaceutical company AbbVie (NYSE:ABBV) is undergoing some transition, but investors shouldn’t be worried about the company’s future.
While it’s lost exclusivity for its Humira rheumatoid arthritis drug, analysts believe that its Skyrizi and Rinvoq drugs will easily replace it, generating more than $15 billion in annual revenue by 2025.
The Illinois company also boasts a strong drug pipeline that’s been bolstered by its purchase of DJS Antibodies, a U.K. company that specializes in immunology treatments. It’s also been boosted by a series of regulatory victories.
While fourth-quarter earnings narrowly missed analysts’ expectations on revenue ($15.12 billion versus an expected $15.3 billion), ABBV beat expectations on earnings per share by 2 cents, recording $3.60.
AbbVie has a market cap of $269 billion and currently has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in XOM, UNH, V and ABBV. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.