Three large-cap stocks analysts like
Wal-Mart, Colgate-Palmolive and Medco Health Solutions are TheStreet Ratings' favorite large-cap companies.
By Jake Lynch, TheStreet
Large-cap stocks have lagged behind small- and mid-caps during the past year. TheStreet's quantitative equity model, which evaluates stocks based on fundamentals and performance, rates these large-cap stocks "buy." Analysts are overwhelmingly bullish on the shares.
3. Wal-Mart (WMT) is the world's largest retailer.
Quarter: Fourth-quarter profit increased 22% to $4.6 billion, or $1.23, as revenue grew 4.5% to $114 billion. The operating margin widened from 6.2% to 6.6%. Wal-Mart has $7.9 billion of cash and $41 billion of debt, translating to a debt-to-equity ratio of 0.6.
Stock: Wal-Mart has advanced 8% during the past year, trailing US indices. It trades at a price-to-earnings ratio of 15, a price-to-projected-earnings ratio of 13 and a price-to-cash-flow ratio of 7.9, 42%, 16% and 23% discounts to industry averages.
Consensus: Of analysts following Wal-Mart, 23, or 79%, advise purchasing its shares and six recommend holding them. HSBC (HBC) projects the stock will climb 24% to $68. Bank of America (BAC) and Goldman Sachs (GS) predict the shares will hit $65.
2. Colgate-Palmolive (CL) makes toothpaste and soap.
Quarter: Fourth-quarter profit expanded 27% to $631 million, or $1.21, as revenue extended 11% to $4.1 billion. The operating margin rose from 23% to 25%. Colgate has $641 million of cash and $3.2 billion of debt, amounting to a debt-to-equity ratio of 1.
Stock: Colgate-Palmolive has risen 41% during the past 12 months, more than the Dow Jones Industrial Average ($INDU) and S&P 500 Index ($INX). It sells for a price-to-sales ratio of 2.7 and a price-to-cash-flow ratio of 13, 22% and 19% premiums to peer-group averages.
Consensus: Of researchers following Colgate-Palmolive, eight rate its stock "buy" and 13 rate it "hold." Goldman Sachs expects the stock to climb 17% to $99. UBS (UBS) believes it will hit $93 and RBC (RY) thinks the shares will touch $88.
1. Medco Health Solutions (MHS) is a mail-order pharmacy giant.
Quarter: Fourth-quarter profit increased 25% to $342 million, or 70 cents, as revenue grew 18% to $15 billion. The operating margin narrowed from 4% to 3.8%. Medco has $2.5 billion of cash and $4 billion of debt, translating to a debt-to-equity ratio of 0.6.
Stock: Medco has soared 53% during the past year, more than benchmarks. It trades at a price-to-sales ratio of 0.5 and a price-to-cash-flow ratio of 8.7, 35% and 12% discounts to industry averages. It's expensive based on projected earnings.
Consensus: Of firms covering Medco, 26, or 81%, advocate purchasing its shares and six advise holding them. Citigroup (C) offers a price target of $82, leaving a potential 28% of upside. Deutsche Bank (DB) sees the stock hitting $78.
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Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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