Since the beginning of the year, the stock market has suffered from several macroeconomic and geopolitical headwinds. The Federal Reserve’s tighter monetary policy to combat the surging inflation has primarily concerned investors. CEO of BlackRock Larry Fink cited that the stock market is not likely to completely rebound in the second half of 2022, as inflation remains high.
In Friday’s trading session, the S&P 500, Nasdaq Composite, and Dow Jones declined 1.6%, 2.5%, and 1%, respectively, as investors worry that a better than expected labor market situation could keep the Federal Reserve on track to raise interest rates aggressively. According to the labor department’s report, 390,000 jobs were added to the U.S. economy in May, surpassing the 3,28,000 Dow Jones estimates.
However, large-cap stocks typically outperform their small and mid-cap counterparts amid market disruptions due to their greater market reach, financial flexibility, and pricing power. That’s why today we're highlighting 3 exciting stocks from our Top 10 Large-Cap screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). McKesson Corporation (MCK), Novo Nordisk A/S (NVO), and Waste Management, Inc. (WM) are high-quality large-cap stocks that are rated ‘Strong Buy’ in our proprietary POWR Ratings system.
McKesson Corporation (MCK)
MCK offers healthcare services in the United States and internationally. It has four operating segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (RxTS). The company has a market capitalization of $45.99 billion.
For the fourth quarter ending, MCK's revenue increased 11.8% year-over-year to $66.10 billion in the fourth quarter ending March 31, 2022. Its operating income amounted to $633.00 million, while its net income amounted to $368.00 million. The company's EPS came in at $2.47.
The $25.49 consensus EPS estimate for fiscal 2024 represents 9.4% year-over-year growth. Analysts expect revenue to increase 3.6% year-over-year to $64.90 billion for the first quarter ending June 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters. The company's shares have surged 27.3% year-to-date and 53.4% over the past nine months.
MCK's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Sentiment, Stability, and Quality. Within the Medical - Services industry, it is ranked #1 of 86 stocks. To see additional POWR Ratings for Value, Growth, and Momentum for MCK, click here.
Novo Nordisk A/S (NVO)
With a market capitalization of $254.78 billion, headquartered in Bagsvaerd, Denmark, NVO, a healthcare company, engages in the research, development, manufacture, and marketing of pharmaceutical products worldwide. It has two operating segments: Diabetes and Obesity care and Biopharm.
During the first quarter ending 2022, NVO’s sales increased 24% year-over-year to DKK42.03 billion ($6.06 billion). Its operating profit grew 28% from its year-ago value to DKK19.15 billion ($2.76 billion), while its net profit amounted to DKK14.21 billion ($2.05 billion), up 13% from its prior-year quarter. The company’s EPS grew 14.1% year-over-year to DKK6.22.
The consensus EPS estimate of $0.86 for the third quarter ending September 2022 represents 4.5% year-over-year growth. Analysts expect revenue to increase 10.4% year-over-year to $5.81 billion for the second quarter ending June 2022. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 41.1 % over the past year.
NVO's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Quality and a B grade for Sentiment and Stability. Within the Medical - Pharmaceuticals industry, it is ranked #3 of 165 stocks.
In total, we rate NVO on eight different levels. Beyond what we've stated above, we have also given NVO grades for Growth, Value, and Momentum. Get all the NVO ratings here.
Waste Management, Inc. (WM)
With a market capitalization of $65.92 billion, WM and its subsidiaries offer waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It provides collection services, including picking up and transporting the waste, and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities.
For the first quarter ending March 31, 2022, WM’s revenue increased 13.4% year-over-year to $4.66 billion. Its adjusted income from operations grew 16.5% from its year-ago value to $803.00 million, while its adjusted net income amounted to $540.00 million, up 20% from its prior-year quarter. The company’s adjusted EPS rose 21.7% year-over-year to $1.29.
The $1.40 consensus EPS estimate for the second quarter ending June 2022 represents 10.3% year-over-year growth. Analysts expect revenue to increase 8.1% year-over-year to $4.84 billion for the second quarter ending June 2022. The company's shares have surged 13.2% over the past year.
It is no surprise that WM has an overall A rating, which equates to Strong Buy in our POWR Ratings system. WM has a B grade for Quality, Stability, and Growth. In the Waste Disposal industry, it is ranked #1 of 15 stocks.
Click here to see the additional POWR Ratings for WM (Sentiment, Value, and Momentum).
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MCK shares were trading at $317.01 per share on Monday afternoon, up $0.63 (+0.20%). Year-to-date, MCK has gained 27.93%, versus a -13.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
The post 3 High-Quality Large-Cap Stocks to Buy This Month appeared first on StockNews.com
