2 Sturdy Large Cap Stocks To Buy This Month

The past 30 days have brought plenty of volatility — and the stock market has taken a beating. In that timeframe, the S&P 500 benchmark index has dropped by 1.40%. But not all market cap categories have performed the same.

Large caps have managed not only to resist the pullback, but also eke out gains in a challenging environment. 

This does not, however, set up any easy trades. Large caps receive the most publicity and are much more likely to be overcrowded. To successfully leverage recent market dynamics, separating the wheat from the chaff is essential — so you have to turn to the fundamentals.

The issue here is that there are simply way too many stocks to look at. Thankfully, that problem can be sidestepped — you just have to turn to…

Small Caps Stock Strategy

Our in-house quant rating system uses 115 fundamental metrics and factors to evaluate roughly 4,600 stocks on a daily basis. That big-picture overview is condensed into a simple, approachable metric — a stock’s Zen Rating.

Only the top 5% of stocks are given a Zen Rating of A, equivalent to a Strong Buy rating. However, 5% of 4,600 is still 230, and that’s still quite a number. But, there’s a way for you to narrow the search down even further — with the help of one of our exclusive Zen Strategies.

There are 11 of these strategies in total — each is a carefully-constructed portfolio, consisting of just 7 stocks. With recent goings-on in mind, today we’ll be taking a look at a Strategy that has an all-time annual return of 15.37%, and which has provided a 3.75% return since the start of the year, far ahead of the S&P 500’s 0.3% return in the same timeframe. I’m talking about our Large Caps Stock Strategy.

Expedia (EXPE)

If you’ve heard of Trivago, you’ve heard of Expedia. The $26 billion market cap travel technology stock currently ranks in the top 3% for fundamentals on the whole, and it’s the top-rated stock in the Travel industry, which has an Industry Rating of B.

Expedia beat earnings on February 12. EPS came in at $3.1, versus analyst expectations of $2.88. The stock is down 19.14% on the monthly chart, but rallied by 6% last week, so the recovery is already underway. It’s currently trading at a P/E ratio of just 20.9x, with a price-to-earnings growth (PEG) ratio of 0.62x. It’s extremely undervalued, and ranks in the 98th percentile of the stocks that we track when it comes to the Value Component Grade rating.

At the same time, it ranks in the top 19% for Growth, and the top 13% for Sentiment. Post-earnings, there has been a flurry of price target upgrades — Wedbush, Da Davidson, TD Cowen, and Barclays all have price targets at $260, which implies a 20.54% upside. Wells Fargo believes it could climb as high as $315, which would imply a 46.04% upside. The average price target, based on 24 analysts, is 31.07%. Hard to ignore that.

No one has caught on just yet — and that’s your opportunity. The downside is that it ranks in the bottom 42% for Safety, and has a Beta of 1.42. The ride will most likely be bumpy — but at the current valuation, it’s hard to argue that it won’t pan out in your favor eventually.

Cummins (CMI)

Our second pick is Cummins, a $26.43 billion maker of engines and power systems. CMI is currently in the top 5% of stocks in terms of overall fundamentals, and it’s the 4th highest-rated stock in the Specialty Industrial Machinery industry, which has an Industry Rating of A. Cummins also beat earnings. The report from February 5 saw EPS come in at $5.81 versus estimates of $5.2. 

The stock has seen an almost 8% bump since then. Wall Street’s top analysts see much more to come. Jamie Cook from Truist Securities (ranked in the top 3% of analysts by actual stock picking performance) reiterated a Strong Buy at $703 — a 20.4% upside. Evercore’s David Raso, top 8%, a Buy at $694 — 18.86% upside. Tim Thein of Raymond James, top 19%, a Buy at $675 — 15.61% upside. Smart money is piling on to this one. CMI is in the top 8% of stocks for Sentiment.

That’s not all it has going for it, though. For Growth, it’s in the top 28% — for Financials, in the 86th percentile. Safety, however, is the strongest point here — and a nice counterbalance to our previous pick. Consistent revenue inflows and a Beta of 0.95 put Cummins in the top 3% of stocks in this category.

The valuation is the downside. That sort of reliability comes at a cost. In terms of the Value Component Grade rating, CMI ranks in the 49th percentile. That’s not terrible — it means equivalent to or better than 49% of stocks, but there’s room for improvement. Still, on the whole, it’s a tradeoff worth investigating — and since that flood of analyst upgrades is bound to attract attention, waiting too long most likely isn’t the play here.

Interested In More Great Stock Picks?

The 2 stocks highlighted above are just a fraction of what you get from our proven Large Caps Stock Strategy. 

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 income stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Large Caps stocks here >

However, maybe your portfolio already has enough large caps, and you’d like to diversify. Perhaps you would like to see all 11 of our market beating strategies including Growth, Value, Momentum or perhaps even Income stocks. 

Each featuring the top 7 stocks.

Each featuring tremendous performance.

We spell it all out in this timely presentation below that lives up to its name:

77 Best Stocks Now! > 

What to Do Next?

• 77 Best Stocks NOW! >
• See All “A” Rated Stocks with +32.52% Average Annual Return >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.