In this article, we discuss 10 best Fortune 500 stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Fortune 500 Stocks to Buy Now.
The Fortune 500 list consists of the largest public and private companies from the United States, ranked by annual revenues, compiled by Fortune Magazine every year. Walmart Inc. (NYSE:WMT) has consistently ranked as the top Fortune 500 company for 8 years in a row, followed by Amazon.com, Inc. (NASDAQ:AMZN).
The Fortune 500 companies contribute to about one-third of the world’s gross domestic product. Although, in 2021, owing to the global lockdowns, supply chain disruptions, shortage of labor, demand contraction, and ever changing government mandates regarding businesses, the Fortune 500 companies’ collective revenue dropped by roughly 5% to $31.7 trillion. Similarly, the combined profit of the Fortune 500 members equaled $1.6 billion, down by 20% as compared to 2020.
However, the Fortune 500 list consists mostly of legacy names who were able to combat the COVID-19 headwinds and survive the financial distress that caused many smaller companies to shut down. Even though the economic outlook remains uncertain due to the Omicron variant of COVID-19, the Fortune 500 companies are solid investments since their strong cash flow, adoption of online retail, and solid market footprint enables them to navigate financial and economic downturns.
The most popular Fortune 500 companies include Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
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Our Methodology
We selected the Fortune 500 companies that had strong fundamentals, growth prospects heading into 2022, and positive analyst ratings. We ranked the list according to the hedge fund sentiment surrounding the holdings.
Best Fortune 500 Stocks to Buy Now
10. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 55
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational retail chain, offering food, home appliances, electronics, and fashion accessories. Some Costco Wholesale Corporation (NASDAQ:COST) warehouses have gas stations and pharmacies, optometrists, and car garages as well.
On December 14, Argus analyst Chris Graja raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $610 from $515 and kept a Buy rating on the shares, citing the Q1 2022 earnings beat. The analyst stated that he remains “very bullish” on Costco Wholesale Corporation (NASDAQ:COST) as the stock has fared well even during severe market turbulence.
Fisher Asset Management is the largest Costco Wholesale Corporation (NASDAQ:COST) stakeholder as of Q3 2021, with 3.8 million shares worth $1.74 billion. Overall, 55 hedge funds reported owning stakes worth $4.39 billion in Costco Wholesale Corporation (NASDAQ:COST) in the third quarter.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Costco Wholesale Corporation (NASDAQ:COST) is one of the best Fortune 500 stocks to buy now.
Here is what Saturna Capital Sextant Funds has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2021 investor letter:
“Costco had a rocky start to the year as the vaccine rollout perhaps convinced investors that shopping habits might normalize. Instead, the spread of the Delta variant, combined with contributions from the millions of new members Costco attracted since the beginning of the pandemic, have powered the business and the share price forward since early March.”
9. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 61
CVS Health Corporation (NYSE:CVS) is an American healthcare corporation that owns a number of pharmacies and clinics, including CVS Pharmacy, MinuteClinic, Omnicare, and CVS Caremark, among others. Believing the company’s ongoing growth initiatives and its primary care focus strategy will drive long-term shareholder value creation, Tigress Financial analyst Ivan Feinseth on December 23 raised the price target on CVS Health Corporation (NYSE:CVS) to $122 from $108 and reiterated a Buy rating on the shares.
Harris Associates, one of the top Wall Street hedge funds, was bullish on CVS Health Corporation (NYSE:CVS) during the third quarter, holding more than 8 million shares worth approximately $686 million. Overall, 61 hedge funds in the third quarter database of Insider Monkey were long CVS Health Corporation (NYSE:CVS), down from 67 funds in the preceding quarter.
Publishing its Q3 results on November 3, CVS Health Corporation (NYSE:CVS) announced an EPS of $1.97, beating estimates by $0.18. The $73.79 billion revenue over the period jumped 10.05% year-over-year, exceeding estimates by $3.27 billion.
Here is what ClearBridge Investments has to say about CVS Health Corporation (NYSE:CVS) in its Q2 2021 investor letter:
“Our differentiated positions in the health care sector also made strong contributions as the market began to reward the heavily discounted sector. CVS Health Corporation (NYSE:CVS) saw strength in its pharmacy benefits manager business as well as its managed care business, Aetna, helping to confirm our positive view of CVS’s repositioning of its business model from a dispensary model to a service model. With CVS Health Corporation (NYSE:CVS) store-based health care services offering patients better convenience, encouraging better health care compliance and ultimately lower costs, we believe the company is at the forefront of a changing mindset in the health care services sector.”
8. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 64
Exxon Mobil Corporation (NYSE:XOM), a Texas-based multinational oil and gas corporation, expects higher gasoline prices to elevate its earnings from $700 million in the third quarter to $1.1 billion in the fourth quarter. Exxon Mobil Corporation (NYSE:XOM)’s 5.75% dividend yield also makes it one of the best Fortune 500 stocks to diversify an income portfolio.
Exxon Mobil Corporation (NYSE:XOM) has partnered with Scepter, Inc. to deploy advanced satellite technology and proprietary data processing platforms to detect methane emissions at a global scale, which will reduce emissions from multiple industries including energy, agriculture, manufacturing, and transportation.
Of the 64 hedge funds that were bullish on Exxon Mobil Corporation (NYSE:XOM) in the third quarter, GQG Partners is the largest company stakeholder, with 26.5 million shares worth $1.56 billion.
Here is what Goehring & Rozencwajg Associates has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 71
A multinational retail corporation, offering discount stores, grocery stores, and hypermarkets, Walmart Inc. (NYSE:WMT) is one of the best Fortune 500 stocks to buy now. Walmart Inc. (NYSE:WMT) is benefiting from the reopening of the economy, and to meet rising e-commerce demand, the company announced on December 15 plans to build a new fulfillment center in Salt Lake City.
In the third quarter of 2021, 71 hedge funds were bullish on Walmart Inc. (NYSE:WMT), with stakes amounting to $7.93 billion. Bill & Melinda Gates Foundation Trust is one of the leading stakeholders of Walmart Inc. (NYSE:WMT), which increases investor confidence in the stock. The Gates’ fund holds 6.92 million Walmart Inc. (NYSE:WMT) shares, worth roughly $965 million.
MKM Partners analyst Bill Kirk on November 19 upgraded Walmart Inc. (NYSE:WMT) to Buy from Neutral with a price target of $166, up from $156. The analyst observed that relative to peers, Walmart Inc. (NYSE:WMT) had better inventory levels heading into the holiday and has shown the best progress toward building a subscription model.
6. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 95
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational healthcare and insurance company.
On December 20, Mizuho analyst Ann Hynes raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $550 from $500 and kept a Buy rating on the shares. According to the analyst, the managed care sector is set to outperform in 2022 owing to increased earnings visibility, reduced legislative risk, an improved economic backdrop, and less exposure to supply chain and other inflationary risks as opposed to other sectors.
Publishing its third quarter results on October 14, UnitedHealth Group Incorporated (NYSE:UNH) posted earnings per share of $4.52, exceeding estimates by $0.10. Revenue over the period increased 11.09% from the prior-year quarter, totaling $72.34 billion, outperforming estimates by $1.05 billion.
In Q3 2021, 95 hedge funds were long UnitedHealth Group Incorporated (NYSE:UNH), with stakes totaling $11.7 billion. Boykin Curry’s Eagle Capital Management is one of the largest UnitedHealth Group Incorporated (NYSE:UNH) stakeholders, with over 3 million shares worth $1.20 billion.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), hedge funds are also piling into UnitedHealth Group Incorporated (NYSE:UNH).
Here is what Third Point Management has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2021 investor letter:
“UnitedHealth is one of the largest healthcare companies in the world and a market leader in both its insurance and healthcare services (Optum) businesses. We initiated our position during the 2020 Presidential election at a time of heightened political and regulatory uncertainty.
We believe under its new CEO, Andrew Witty, UnitedHealth Group Incorporated (NYSE:UNH) can not only preserve its market dominance and sustain industry-leading growth rates across most of its key segments but also enter new healthcare services markets. Witty is known as a mission-driven CEO who clearly articulates his view that providing high-quality, affordable health care services is a social good. He receives consistently high marks from former colleagues, and we believe that his leadership approach will ballast and even strengthen UNH’s already impressive management and employee ranks. The insurance and services businesses are synergistic and complementary, which entrenches UnitedHealth Group Incorporated (NYSE:UNH)’s critical role in care financing, access, and management. This dynamic gives us confidence in the durability of United’s market leadership…” (Click here to see the full text)
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Disclosure: None. 10 Best Fortune 500 Stocks to Buy Now is originally published on Insider Monkey.
