Large-cap stocks are a key component of almost every portfolio. They are well-established, receive extensive analyst coverage, and often pay dividends, making them popular among investors.
While their steady nature may not appeal to all investors, the reduced volatility of large-cap stocks is highly valued by more conservative investors.
If you are looking for large-cap exposure, there are three stocks worth considering: Caterpillar (CAT), Alibaba (BABA), and Aflac (AFL). These stocks have all seen positive shifts in their near-term outlooks. Let’s take a closer look at each of them.
Alibaba
Alibaba, currently ranked as a Zacks Rank #1 (Strong Buy), is one of China’s leading e-commerce giants. The company has been experiencing positive earnings estimate revisions across the board, especially for its current year.
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Alibaba has a history of exceeding bottom line expectations, beating the Zacks Consensus EPS Estimate by an average of 18% in its last four releases. In its latest report, the company posted a 22% EPS beat and reported revenue 5% ahead of the consensus.
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The company is also projected to achieve solid growth in its current year (FY24), with Zacks Consensus Estimates suggesting 15% earnings growth on 5% higher revenues. Looking ahead to FY25, estimates indicate a further 7% increase in earnings along with a 9% boost in sales.
Caterpillar
Caterpillar is the world’s leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The stock is currently ranked as a Zacks Rank #1 (Strong Buy), with positive earnings expectations over the past few months.
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Despite its growth trajectory, CAT shares are not overvalued, with earnings projected to rise by 40% in the current year on 12% higher revenues. The stock currently trades at a forward earnings multiple of 14.1X, below the five-year median of 15.8X and the 2022 high of 21.4X.
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Caterpillar shareholders also benefit from steady and consistent dividend payouts, as the company is part of the elite Dividend Aristocrats club. The stock currently offers an annual yield of 1.9%, with the payout growing by 7% annually over the last five years.
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Aflac
Aflac, also ranked as a Zacks Rank #1 (Strong Buy), is an American insurance company and a major provider of supplemental insurance in the U.S. The company has seen modest positive revisions in earnings estimates across all timeframes.
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Like Caterpillar, Aflac is a member of the Dividend Aristocrats club, demonstrating its commitment to shareholders through more than 25 years of increasing dividends. AFL shares currently yield 2.2%, with a five-year annualized dividend growth rate of 12%.
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Bottom Line
Large-cap stocks are an essential part of almost every portfolio due to their stability and proven track records.
If you are looking for large-cap exposure, consider Caterpillar (CAT), Alibaba (BABA), and Aflac (AFL). All three stocks have improved earnings outlooks and can be great considerations for investors.
Disclaimer: The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
