13 Best Big Company Stocks to Buy
In this article, we discuss the 13 best big company stocks to buy. To skip the latest news and analysts’ sentiments around the current economic conditions, go directly to the 5 Best Big Company Stocks to Buy.
Despite the doubts, the market performed exceptionally in 2023. While several analysts believed it to be temporary, the new year isn’t showing many signs of weakness in the market. Although there have been a few hurdles, the overall prediction is that the Federal Reserve will manage to guide the US economy toward a soft landing rather than a recession, as was expected in the last two years. However, analysts still advise caution in the short term. Marko Kolanovic, Chief Global Markets Strategist and Global Co-Head of Research at J.P. Morgan, said:
“As we approach 2024, we expect both inflation data and economic demand to soften, as the tailwinds for growth and risk markets are fading. Overall, we are cautious on the performance of risky assets and the broader macro outlook over the next 12 months, due to building monetary headwinds, geopolitical risks and expensive asset valuations.”
Nevertheless, the latest news suggests that the financial markets are heading in the right direction as the S&P 500 touched 5000 for the first time at the time of market opening on February 9 after December inflation data, which turned out to be even lower than initially reported. While the Fed recently revealed that it will take its time to review market data before making any decision to announce rate cuts, many analysts believe that the rate cuts can begin in the first half of 2024.
Despite the positive predictions around the market, the varying opinions of experts can lead to further confusion among novice investors, which is why the best big company stocks are some of the safest bets for such people. These big company stocks bring a sense of safety among investors as the losses are never permanent, even during bear market conditions. Additionally, the best company stocks are usually cash-rich with strong balance sheets and can easily weather any economic disasters. Furthermore, their wealth also allows them to pay steady dividends. For example, one of the giants in the energy sector, Chevron Corporation (NYSE:CVX) has increased its dividends for the last 37 years, even though the last 10 years have seen some significant volatility in the energy sectors. Similarly, another blue-chip stock, PepsiCo, Inc. (NASDAQ:PEP) raised its dividend by 7% on February 9 despite year-over-year (YoY) revenue declines across major markets in the fourth quarter of 2023.
The big company stocks do not guarantee positive returns all the time but provide ample opportunities for investors when they fall. For example, earlier this month, we discussed the 10 blue-chip stocks at 52-week lows, which you should check out as these are also some of the best big company stocks that provide prime entry points for investors. However, our current list uses a different methodology, and some of our current best big company stocks include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META). After an exceptional performance in 2023, Meta Platforms, Inc. (NASDAQ:META) declared its first-ever quarterly dividend of $0.50 per share on February 1 and increased its previous share buyback authorization by $50 billion. The company nearly gained 200% in the year and is up nearly 36% year-to-date (YTD) at the time of writing on February 9.
A large stock market board displaying the S&P 500 and S&P 500 Growth Index.
Our Methodology
To choose the best big company stocks, we used the FinViz stock screener to identify mega-cap stocks with an estimated 5-year EPS growth of over 15%. These stocks were then listed according to the number of their hedge fund investors in the third quarter of 2023. The hedge fund sentiment was taken from Insider Monkey’s database of 910 elite hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Big Company Stocks to Buy
13. ASML Holding N.V. (NASDAQ:ASML)
ASML Holding N.V. (NASDAQ:ASML) is a Dutch company that manufactures and distributes semiconductor manufacturing equipment.
On January 24, ASML Holding N.V. (NASDAQ:ASML) announced an interim dividend of EUR 1.45 per share, which is payable by February 14.
ASML Holding N.V. (NASDAQ:ASML) is one of the best big company stocks to buy, along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
ClearBridge Investments stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Another welcome change has been the recognition of generative artificial intelligence (AI) opportunities for companies outside the U.S. While our IT holdings trailed their mega cap U.S. counterparts for most of the year, semiconductor equipment makers ASML Holding N.V. (NASDAQ:ASML) and Tokyo Electron, which we consider enablers of AI, as well as enterprise software maker SAP and IT consultant Accenture, which we see as facilitators of AI adoption in new product lines and/or enhanced business models, rose strongly in the quarter. These companies are rolling out new, AI-enhanced products at higher prices which should positively impact earnings in the near term.
On an individual stock basis, the largest contributors to absolute returns in the quarter included ASML and Tokyo Electron in the IT sector.”
12. Merck & Co., Inc. (NYSE:MRK)
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based company that discovers, develops, manufactures, and markets prescription medicines, vaccines, animal health products, etc.
On February 5, Merck & Co., Inc. (NYSE:MRK) announced that it would buy the aqua business from Elanco Animal Health Incorporated (NYSE:ELAN) for $1.3 billion in cash. The deal is expected to be finalized by mid-2024, and the company will get two manufacturing facilities in Canada and Vietnam and a research facility in Chile as part of the deal.
On February 1, Merck & Co., Inc. (NYSE:MRK) announced its Q4 non-GAAP EPS of $0.03, topping the estimates by $0.14. The revenue of the quarter grew by 6% YoY to $14.6 billion, surpassing the estimates by $120 million.
Carillon Tower Advisers made the following comment about Merck & Co., Inc. (NYSE:MRK) in its Q3 2023 investor letter:
“Merck & Co., Inc. (NYSE:MRK) underperformed in the third quarter, based on what we view as largely macroeconomic-related factors. The company continues to execute well, both clinically and fundamentally, but much of the biopharmaceutical industry has been weak as investors are gravitating to other, more cyclical sectors.”
11. Bank of America Corporation (NYSE:BAC)
Bank of America Corporation (NYSE:BAC) is a North Carolina-based company that offers various services, including wealth management services, credit and debit cards, and more.
On January 30, Morgan Stanley analyst Betsy Graseck upgraded Bank of America Corporation (NYSE:BAC)’s stock to Overweight from Equal Weight and increased the price target to $41 from $32.
On January 31, Bank of America Corporation (NYSE:BAC) announced a quarterly dividend of $0.24, payable by March 29 to the shareholders of record on March 1. At the time of writing on February 9, the stock’s dividend yield was 2.91%.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 88 hedge funds had investments in Bank of America Corporation (NYSE:BAC)’s stock in the third quarter. Warren Buffett’s Berkshire Hathaway was the most significant stakeholder in the company and owned 1.03 billion company shares worth $28.28 billion.
10. Netflix, Inc. (NASDAQ:NFLX)
Netflix, Inc. (NASDAQ:NFLX) is a California-based company that provides subscription video-on-demand over-the-top streaming service in more than 190 countries.
On January 26, Argus raised the price target on Netflix, Inc. (NASDAQ:NFLX)’s stock to $660 from $575 and maintained a Buy rating. Highlighting the company’s Q4 results, the analyst mentioned the company’s emphasis on stopping password-sharing, an advertising-supported service plan, and more.
On January 23, Netflix, Inc. (NASDAQ:NFLX) posted its Q4 GAAP EPS of $2.11. The revenue of $8.83 billion jumped 12.5% YoY, which beat the analysts’ estimates by $120 million.
Polen Capital mentioned Netflix, Inc. (NASDAQ:NFLX) in its fourth quarter 2023 investor letter. Here is what it said:
“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, Inc. (NASDAQ:NFLX), ServiceNow, and Salesforce.
During Netflix’s pandemic grow-over issues in 2022, the market seemed to believe there was little revenue or free cash flow growth left to be had for this business. The pandemic had pulled forward user growth, and the company then disclosed that there were over 100 million households that were using Netflix but not paying for it by borrowing a paid user’s account. After we assessed this information, better understood how the company could monetize shared passwords, and realized the win-win for Netflix and consumers from introducing an ad-supported subscription tier, we meaningfully added to our position in Netflix in the summer of 2022. We saw a clear path to much better monetization of an already robust and differentiated platform with a continued commitment to improved content spend efficiency and free cash flow growth.
Fast forward to today, Netflix has made meaningful progress on monetizing shared passwords and laying the foundation for consumer choice, although the ramp in advertising tier subscribers remains in the beginning stages. The low-hanging fruit may already have been picked on password sharing efforts, but our research shows there should be long tails of revenue and free cash flow growth. In our opinion, Netflix remains the most advantaged and profitable streaming service with opportunities to continue adding subscribers and raising prices as it demonstrates more value to consumers over time. Over the longer term, we also expect significant advertising revenue. That said, the market finally seems to have appreciated some of this. As a result, we trimmed our position from approximately 8% of the Portfolio to approximately 5% in the fourth quarter.”
9. Eli Lilly and Company (NYSE:LLY)
Eli Lilly and Company (NYSE:LLY) is an Indiana-based company that discovers, develops, and markets human healthcare products.
On February 6, Eli Lilly and Company (NYSE:LLY) posted its Q4 non-GAAP EPS of $2.49, which beat the estimates by $0.12. The revenue of $9.35 billion grew 28.1% YoY, topping the estimates by $380 million.
Eli Lilly and Company (NYSE:LLY) was mentioned in Baron Funds’ fourth quarter 2023 investor letter. Here is what it said:
“Stock selection was also positive in the sub-industry owing to strong gains from therapeutics-focused pharmaceutical giant Eli Lilly and Company (NYSE:LLY). Lilly’s stock continued to outperform driven by strong sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises, particularly after Novo Nordisk released its SELECT trial results showing a 20% relative risk reduction in overweight patients with cardiovascular disease and no prior history of diabetes.
Eli Lilly and Company is a global pharmaceutical company that discovers, develops, manufactures, and sells medicines in the categories of diabetes, oncology, neuroscience, and immunology, among other areas. Stock performance was strong due to strong third quarter sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises. We continue to think Lilly is well positioned to grow revenue and earnings at attractive rates through the end of the decade and beyond.
We own Eli Lilly and Company, which we believe will remain a leader in the GLP-1 medicine class with Mounjaro, Zepbound, and the company’s deep pipeline of next generation GLP-1 medicines.”
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based company that develops and sells semiconductor products and devices.
Over the last three months, 34 Wall Street analysts covered Advanced Micro Devices, Inc. (NASDAQ:AMD), and 29 maintained a Buy rating on the shares. At the time of writing on February 9, the average price target of $194.16 represented an upside of 12.79%.
In the third quarter, 110 hedge funds held a stake in Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock, compared to 112 hedge funds in the previous quarter, but the total stake value increased to $9.156 billion in Q3, up from $6.93 billion in Q2. Ken Fisher’s Fisher Asset Management was the top investor in the company, with 27.768 million shares worth $2.855 billion.
White Falcon Capital Management stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“It is important to note that the returns depicted above actually originated in the market turmoil of 2022 and were only realized in 2023. We assess that about 75% of the returns in 2023 were derived from just 35% of the portfolio. Notably, the technology companies we acquired in 2022 – Advanced Micro Devices, Inc. (NASDAQ:AMD), Amazon, Docebo, NU, Rover – performed exceptionally well. In hindsight, the decision to allocate to technology stocks appears straightforward; but it actually demanded courage and conviction to buy and add to these stocks during the fear and uncertainty of the 2022 bear market.
The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings, AMD Amazon.com and Converge Technology Services. AMD has worked out great for us but we must admit that it has gotten expensive. AI was not part of our original investment thesis and AMD is a great reminder of how one can get ‘lucky’ investing in quality businesses run by competent management teams (ditto for Amazon).”
7. Berkshire Hathaway Inc. (NYSE:BRK-B)
Berkshire Hathaway Inc. (NYSE:BRK-B) is a multinational conglomerate headquartered in Omaha, Nebraska. Through its subsidiaries, it offers various services like freight rail transportation, finance, and more. Most of Berkshire Hathaway Inc. (NYSE:BRK-B)’s revenue is generated from its insurance business.
According to Insider Monkey’s database, hedge fund sentiment was positive toward Berkshire Hathaway Inc. (NYSE:BRK-B) in the third quarter, as 116 hedge funds had investments in the stock, up from 109 in the prior quarter.
Berkshire Hathaway Inc. (NYSE:BRK-B) is our seventh best big company stock to buy.
6. Salesforce, Inc. (NYSE:CRM)
Salesforce, Inc. (NYSE:CRM) is a California-based company that offers customer relationship management software and applications to customers worldwide. With 122 hedge fund investors, the company occupies the sixth spot on our list.
On January 23, Baird analyst Rob Oliver increased the price target on Salesforce, Inc. (NYSE:CRM)’s stock to $310 from $300 and kept an Outperform rating on the shares.
Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META) are some of the best big company stocks to buy, besides Salesforce, Inc. (NYSE:CRM).
Polen Capital stated the following regarding Salesforce, Inc. (NYSE:CRM) in its fourth quarter 2023 investor letter:
“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, and Salesforce, Inc. (NYSE:CRM).
Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”
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Disclosure. None. 13 Best Big Company Stocks to Buy is originally published on Insider Monkey.
