12 Best Fortune 500 Stocks to Buy Now

Published on October 18, 2022 at 9:44 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 12 best Fortune 500 stocks to buy now. If you want to read about some more Fortune 500 stocks, go directly to 5 Best Fortune 500 Stocks to Buy Now.

Large cap stocks in the United States like Microsoft Corporation (NASDAQ:MSFT), Berkshire Hathaway Inc. (NYSE:BRK-B), and Apple Inc. (NASDAQ:AAPL) are already feeling the heat of an economic downturn as the earnings per share of these businesses register unusual blips in the face of rising interest rates and soaring inflation. However, analysts at top investment advisors in the US have backed these firms to emerge from the crisis better than peers based on the solidity of their business models.

For example, Morgan Stanley analyst Erik Woodring recently named Apple Inc. (NASDAQ:AAPL), one of the most prominent Fortune 500 stocks, as a top pick at the stock market in the event of a macro slowdown. The bullish recommendation has raised eyebrows in the finance world since consumer and enterprise checks deteriorated in the third quarter, suggesting further downside to estimates, with valuation multiples lower but not at troughs. Per Woodring, the electronics giant had greater insulation in this scenario as opposed to competitors.

Our Methodology

The companies that feature on the Fortune 500 list were selected for this analysis. 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 Alexandr Bormotin on Unsplash

Best Fortune 500 Stocks to Buy Now

12. AT&T Inc. (NYSE:T)

Number of Hedge Fund Holders: 55

AT&T Inc. (NYSE:T) provides telecommunications, media, and technology services worldwide. It is one of the best large cap stocks to invest in. On September 26, AT&T announced that it had won a task order to modernize networks for the US Customs and Border Protection. The agreement is valued up to $119 million. The firm will update the voice and data networks of Customs Border Protection under the deal.

On September 29, investment advisory Barclays maintained an Equal Weight rating on AT&T Inc. (NYSE:T) stock and lowered the price target to $18 from $20. Analyst Kannan Venkateshwar issued the ratings update.

At the end of the second quarter of 2022, 55 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in AT&T Inc. (NYSE:T), compared to 74 in the preceding quarter worth $4 billion.

Just like Microsoft Corporation (NASDAQ:MSFT), Berkshire Hathaway Inc. (NYSE:BRK-B), and Apple Inc. (NASDAQ:AAPL), AT&T Inc. (NYSE:T) is one of the best large cap stocks to buy according to hedge funds.

In its Q2 2022 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:

“I purchased shares of AT&T Inc. (NYSE:T) prior to its spin-off of Warner Brothers Discovery (WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and the Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its own quarterly earnings.

As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”

11. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 64

Costco Wholesale Corporation (NASDAQ:COST) engages in the operation of membership warehouses. It is one of the top large cap stocks to invest in. On October 5, the company revealed that its comparable sales in September grew 8.5% and net sales increased 10.1% year-on-year to $21.46 billion. Costco’s e-commerce sales grew 0.7% during the period, and excluding impact from gas prices and forex, they rose 2.3%.

On September 23, Truist analyst Scot Ciccarelli maintained a Buy rating on Costco Wholesale Corporation (NASDAQ:COST) stock and lowered the price target to $559 from $571, appreciating the strong earnings of the firm.

Among the hedge funds being tracked by Insider Monkey, Washington-based Fisher Asset Management is a leading shareholder in Costco Wholesale Corporation (NASDAQ:COST), with 4.3 million shares worth more than $2.1 billion.

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:

“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco Wholesale Corporation (NASDAQ:COST), which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”

10. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 65

CVS Health Corporation (NYSE:CVS) provides health services in the United States. It is one of the premier large cap stocks to invest in. On September 29, McKesson, a leading pharmaceutical distribution firm, said that it has extended its partnership with CVS Health to distribute pharmaceuticals through June 2027. Both pharmaceutical companies extended the deal to mail order and retail pharmacies as well as distribution centers.

On September 7, Evercore ISI analyst Elizabeth Anderson maintained an Outperform rating on CVS Health Corporation (NYSE:CVS) stock and raised the price target to $125 from $120, noting that the CVS model was updated to accelerate further estimates.

Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in CVS Health Corporation (NYSE:CVS), with 3.4 million shares worth more than $312.7 million.

In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE:CVS) was one of them. Here is what the fund said:

“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of CVS Health, which is well-positioned to help define the future of health care in terms of costs, quality and convenience.”

9. Cigna Corporation (NYSE:CI)

Number of Hedge Fund Holders: 66

Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. It is one of the major large cap stocks to invest in. On October 3, Cigna Corp said that it was expanding the Medicare Advantage plans for 2023. The firm added that it will offer Medicare Advantage plans with more features in 581 counties in 28 states during this year’s Annual Election Period which will begin on October 15 and will continue through December 7. Cigna plans to grow its geographic presence by 22% as part of the plan.

On August 8, UBS analyst Kevin Caliendo maintained a Buy rating on Cigna Corporation (NYSE:CI) stock and raised the price target to $330 from $310, highlighting that the company’s stock has outperformed its peers since reporting Q2 earnings.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Glenview Capital is a leading shareholder in Cigna Corporation (NYSE:CI), with 2.1 million shares worth more than $547 million.

In its Q2 2022 investor letter, Aristotle Capital Management, LLC, an asset management firm, highlighted a few stocks and Cigna Corporation (NYSE:CI) was one of them. Here is what the fund said:

“Cigna Corporation (NYSE:CI) contributed to performance in the second quarter, outpacing the benchmark Health Care sector return. We believe Cigna benefited from investors seeking relative “safety” in the managed care sector and the stock’s attractive valuation at just over 10 times next year’s earnings. During the quarter, Cigna reported an earnings beat due to a better-than-expected medical loss ratio.”

8. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 67

Walmart Inc. (NYSE:WMT) engages in the operation of retail, wholesale, and other units worldwide. It is one of the prominent large cap stocks to invest in. On October 6, Walmart said that it has reached an agreement to acquire Alert Innovation, an e-grocery fulfilment automation company. Alert Innovation has been working with Walmart since 2016, piloting the Alphabot System within Walmart warehouses using autonomous carts to help fulfill online grocery deliveries.

On October 5, investment advisory Erste Group upgraded Walmart Inc. (NYSE:WMT) stock to Buy from Hold, noting that the company’s sales were stable and gradually increasing. Analyst Hans Engel issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Walmart Inc. (NYSE:WMT), with 9.8 million shares worth more than $1.2 billion.

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.”

7. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 72

Exxon Mobil Corporation (NYSE:XOM) explores for and produces crude oil and natural gas. It is one of the elite large cap stocks to invest in. On October 12, Exxon Mobil and a leading manufacturer of hydrogen and nitrogen products, CF Industries, announced that they had signed a landmark commercial agreement to capture and store 2 million metric tons per year of carbon dioxide.

On October 7, Wells Fargo analyst Roger Read maintained an Overweight rating on Exxon Mobil Corporation (NYSE:XOM) stock and lowered the price target to $109 from $116, noting that the company had pledged to return approximately $30 billion via share repurchases.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Exxon Mobil Corporation (NYSE:XOM), with 47.5 million shares worth more than $4.1 billion.

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

6. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 91

United Group Incorporated (NYSE:UNH) operates as a diversified healthcare company in the United States. It is one of the best large cap stocks to invest in. On October 3, UnitedHealth Group reported that it has completed its acquisition of Change Healthcare for $8 billion after a judge denied the Department of Justice’s attempt to block the combination. According to an 8K filing, Change Healthcare’s shares were delisted following the completion of the deal.

On September 8, Deutsche Bank analyst George Hill maintained a Buy rating on UnitedHealth Group Incorporated (NYSE:UNH) stock and raised the price target to $569 from $556, noting that the firm had partnered with Walmart in the Medicare Advantage space.

At the end of the second quarter of 2022, 91 hedge funds in the database of Insider Monkey held stakes worth $10.9 billion in United Group Incorporated (NYSE:UNH), compared to 103 in the preceding quarter worth $12.8 billion.

In addition to Microsoft Corporation (NASDAQ:MSFT), Berkshire Hathaway Inc. (NYSE:BRK-B), and Apple Inc. (NASDAQ:AAPL), United Group Incorporated (NYSE:UNH) is one of the best large cap stocks to buy according to hedge funds.

In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and United Group Incorporated (NYSE:UNH) was one of them. Here is what the fund said:

“UnitedHealth Group Incorporated (NYSE:UNH) reported solid quarterly results and raised 2022 guidance modestly. Additionally, managed care is another industry that is viewed as defensive in the current environment, which helped support UnitedHealth and its peer group.”

Click to continue reading and see 5 Best Fortune 500 Stocks to Buy Now.