11 Best Large Cap Stocks to Buy Now

Published on October 20, 2022 at 11:53 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 11 best large cap stocks to buy now. If you want to read about some more large cap stocks, go directly to 5 Best Large Cap Stocks to Buy Now.

Economic experts are forecasting a broad recession in the United States in the next few months due to runaway inflation, interest rates going up more than expected, the unknown effects of quantitative tightening, and the impact of the Russian war in Ukraine. Recently, Jamie Dimon, the CEO of JPMorgan Chase, one of the largest and well-reputed banks in the US, told news platform CNBC that a very, very serious mix of headwinds was likely to tip both the US and global economy into recession by the middle of next year.

Dimon was of the opinion that even though a recession was more than likely, the US economy appeared to be in much better shape than before the last big financial meltdown in 2008. The executive also criticized the central bank for waiting too long and doing too little as inflation jumped to four-decade highs, but acknowledged that it was now clearly catching up. The comments of Dimon echo those of other top experts. Mohamed El-Erian, the chief economic advisor at Allianz, has said that the economy is on a bumpy journey to a better destination.

El-Erian made the comments during an appearance on CBS, in which he stressed that the main source of volatility in the markets was the changing perceptions of the Federal Reserve. He added that the central bank had mischaracterized inflation as transitory earlier this year and did not act in a meaningful way after inflation remained persistent and high. This has battered the markets but also means that large-cap stocks like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL) are trading at discounts.

Our Methodology

The companies that have market capitalizations greater than $10 billion were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Photo by Adam Nowakowski on Unsplash

Best Large Cap Stocks to Buy Now

11. Honeywell International Inc. (NASDAQ:HON)

Number of Hedge Fund Holders: 42

Honeywell International Inc. (NASDAQ:HON) operates as a diversified technology and manufacturing company worldwide. It is one of the best large cap stocks to invest in. On October 10, Honeywell said that its new ethanol jet fuel processing technology will allow the producers to convert corn-based, cellulosic, or sugar-based ethanol into sustainable aviation fuel. Honeywell said that its new aviation fuel will reduce the greenhouse gas emissions by 80%.

On October 12, Morgan Stanley analyst Joshua Pokrzywinski maintained an Equal Weight rating on Honeywell International Inc. (NYSE:HON) stock and lowered the price target to $187 from $192, noting that Q3 results would be largely in line for the multi-industry group.

At the end of the second quarter of 2022, 42 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Honeywell International Inc. (NASDAQ:HON), compared to 50 in the previous quarter worth $1.76 billion.

Just like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL), Honeywell International Inc. (NASDAQ:HON) is one of the best large cap stocks to buy according to hedge funds.

In its Q3 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Honeywell International Inc. (NASDAQ:HON) was one of them. Here is what the fund said:

“The largest exited positions were Oracle, which outperformed significantly, and Texas Instruments and Honeywell International Inc. (NASDAQ:HON), which were roughly flat versus the market in the quarter but were edged out for inclusion by other stocks that became even more attractively valued.”

10. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 55

Starbucks Corporation (NASDAQ:SBUX) operates as a roaster, marketer, and retailer of specialty coffee worldwide. It is one of the top large cap stocks to invest in. On September 13, Starbucks announced new benefits for non-union locations. As part of the plan, there will be a student loan repayment and a savings account in this program. In this program, all non-union employees in the US will be able to contribute a portion of after tax pay on a recurring basis directly from their pay-check.

On September 22, Stephens analyst Joshua Long initiated coverage of Starbucks Corporation (NASDAQ:SBUX) stock with an Equal Weight rating and a $91 price target, noting that near-term challenges in North America and China have an impact on the company’s traffic and bottom line.

At the end of the second quarter of 2022, 55 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Starbucks Corporation (NASDAQ:SBUX), compared to 58 the preceding quarter worth $3.4 billion.

In its Q2 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Starbucks Corporation (NASDAQ:SBUX) was one of them. Here is what the fund said:

“Starbucks Corporation (NASDAQ:SBUX), which garners a lower weighting in the Portfolio, had slightly better than average three-month performance. Samestore sales were up double-digits in the U.S. and International exChina, with solid revenue growth across those regions. The company is experiencing cost pressures from wages and input costs though, and China same-store sales were down 23% due to zero-COVID policy restrictions and lockdowns.”

9. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 60

The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various alcoholic and non-alcoholic beverages worldwide. It is one of the premier large cap stocks to invest in. On September 29, Molson Coors Beverage said it has expanded its exclusive agreement with Coca Cola Company to commercialize and develop Topo Chico Spirited beverage. This deal is said to mark another milestone in the relationship between Molson Coors and Coca Cola.

On October 10, Wedbush analyst Gerald Pascarelli initiated coverage of The Coca-Cola Company (NYSE:KO) stock with an Outperform rating and a $63 price target, noting that the company is currently exhibiting the best organic performance in the carbonated soft drinks category with the best pricing power.

At the end of the second quarter of 2022, 60 hedge funds in the database of Insider Monkey held stakes worth $28 billion in The Coca-Cola Company (NYSE:KO), compared to 64 in the preceding quarter worth $29 billion.

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:

“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (The Coca-Cola Company (NYSE:KO). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”

8. American Express Company (NYSE:AXP)

Number of Hedge Fund Holders: 67

American Express Company (NYSE:AXP) provides charge and credit card products, as well as travel-related services. It is one of the major large cap stocks to invest in. On September 19, American Express said that it has hired more than 3,600 technical workers this year and is aiming to add 1,500 more to its technology arm by the end of 2022. 60% of hiring will be from the US and about a third from India and remaining will be from Europe.

On October 13, Barclays analyst Mark DeVries maintained an Equal Weight rating on American Express Company (NYSE:AXP) stock and lowered the price target to $145 from $160, noting that the company’s Q2 results were strong with modestly decelerating purchase volumes.

Among the hedge funds being tracked by Insider Monkey, Omaha-based investment firm Berkshire Hathaway is a leading shareholder in American Express Company (NYSE:AXP), with 151.6 million shares worth more than $21 billion.

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:

“In financials, American Express Company (NYSE:AXP) has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”

7. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 67

Walmart Inc. (NYSE:WMT) engages in retail and wholesale of general merchandise worldwide. It is one of the elite large cap stocks to invest in. On October 12, Roku, a giant in streaming entertainment, said it is launching its new line of smart home products exclusively on Walmart stores. The new line of smart home products will arrive in nearly 3,500 stores and include products like plugs, lighting accessories, and security cameras.

On September 14, KeyBanc analyst Bradley Thomas initiated coverage of Walmart Inc. (NYSE:WMT) stock with an Overweight rating and a $155 price target, noting that the company over-earned during the pandemic but was now under-earning due to grossly inaccurate inventory positioning.

In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Walmart Inc. (NYSE:WMT) was one of them. Here is what the fund said:

“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”

6. MercadoLibre, Inc. (NASDAQ:MELI)

Number of Hedge Fund Holders: 68

MercadoLibre, Inc. (NASDAQ:MELI) operates online commerce platforms in Latin America. It is one of the premier large cap stocks to invest in. On September 15, MercadoLibre said it is set to double its electric delivery vehicle fleet in the region to over 1,000 by the end of 2022. MercadoLibre is adding more than 500 electric vans using funds from a $400 million sustainable bond which was issued last year.

On October 6, Jefferies analyst John Colantuoni maintained a Hold rating on MercadoLibre, Inc. (NASDAQ:MELI) stock and lowered the price target to $970 from $990, noting that there were reduced estimates and price targets across the US due to the slowing macro environment.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in MercadoLibre, Inc. (NASDAQ:MELI), with 934,000 shares worth more than $594.8 million.

Along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL), MercadoLibre, Inc. (NASDAQ:MELI) is one of the best large cap stocks to buy according to hedge funds.

In its Q2 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and MercadoLibre, Inc. (NASDAQ:MELI) was one of them. Here is what the fund said:

“As written in our Q4 2021 commentary, some significant differences exist between the underlying profitability of ecommerce companies in emerging markets. However, MercadoLibre was punished during the quarter in part because of the sector it happens to operate in. Given its robust cash flow generation, we believe MercadoLibre is well-poised to continue delivering solid cash flows that will enable it to support its operations fully. Going forward, we expect the business to continue growing and providing value-added services to its customers across the continent. In turn, we capitalized on the weakness during the quarter to opportunistically increase our position in MercadoLibre.”

Click to continue reading and see 5 Best Large Cap Stocks to Buy Now.

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