Concerns over the Federal Reserve’s plans to raise interest rates several times this year to combat high inflation and rising geopolitical tensions between Russia and the U.S. over Ukraine propelled a market sell-off last month. However, strong 2021 fourth-quarter GDP growth and an unexpected decline in jobless claims in January helped the benchmark indexes rebound slightly from their lows. Furthermore, impressive fourth-quarter corporate earnings added to the positives.
While not all market participants rebounded based on the positives, some mega-cap stocks outperformed the broader market. With market capitalizations of more than $200 billion, mega-cap stocks usually perform better than smaller stocks amid market volatility because of their companies’ market dominance and financial stability. Investors’ interest in mega-cap tech stocks is evident in the Vanguard Mega Cap ETF’s (MGC) 7.9% returns over the past nine months.
With strong fundamentals and broad market reach, Mastercard Incorporated (MA), Exxon Mobil Corporation (XOM), Toyota Motor Corporation (TM), Chevron Corporation (CVX), and Wells Fargo & Company (WFC) were the best performing mega-cap stocks last month. So, we think it could be wise to add these stocks to one’s watchlist.
Mastercard Incorporated (MA)
With a $374.50 billion market capitalization, MA in Purchase, N.Y. is a technology company that provides transaction processing and other payment-related products and services to consumers, merchants, financial institutions, businesses, governments, and other organizations worldwide. It also provides cyber and intelligence products, information and analytics services, identity verification services, consulting, loyalty and reward programs, processing, and open banking.
On Jan. 20, 2022, MA announced the launch of Mastercard Track Instant Pay, a next-generation virtual card solution that uses machine learning and straight-through processing to enable instant payment of supplier invoices. Integrated with Mastercard Track Business Payment Service, this virtual card solution delivers greater choice, efficiency, and automation for buyers and suppliers to help streamline and speed business payments. MA should witness growing demand from merchants in the coming months.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, MA’s net revenue increased 26.6% year-over-year to $5.23 billion. The company’s operating income came in at $2.83 billion, representing a 37.4% rise from the prior-year period. Its non-GAAP net income was $2.31 billion for the quarter, up 40.8% from the year-ago period. And MA’s non-GAAP EPS increased 43.3% year-over-year to $2.35. The company had $7.42 billion in cash and cash equivalents as of December 31, 2021.
Analysts expect the company’s EPS to increase 23.9% from the prior-year period to $10.41 for its fiscal 2022, ended Dec. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The $22.50 billion consensus revenue estimate for the same fiscal year represents a 19.2% rise from the prior-year period. MA’s EPS is expected to grow at a 25.2% rate per annum over the next five years. The stock gained 6% in price last month.
Exxon Mobil Corporation (XOM)
With a $345.10 billion market cap, XOM in Irving, Tex., is a multinational company that explores for, develops, and distributes crude oil, natural gas, and petroleum products, electric power generation, and coal and mine operations worldwide. The company operates primarily through four segments—Upstream; Downstream; Chemical; and Corporate and Financing. It also manufactures and markets petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products.
On Jan. 31, 2022, XOM announced that it would operate through three business lines–ExxonMobil Upstream Company, ExxonMobil Product Solutions, and ExxonMobil Low Carbon Solutions, effective April 1. The business lines will be supported by ExxonMobil Technology and Engineering technology with other centralized service-delivery groups providing capabilities. This move is part of XOM’s strategy to build globally competitive businesses that lead the industry in earnings and cash flow growth, operating performance, and the energy transition.
XOM’s total revenues came in at $84.97 billion for its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, representing an 82.7% rise from the prior-year period. The company’s income before income taxes was $11.73 billion, compared to a $26.61 billion loss in the year-ago period. Its net income came in at $8.87 billion for the quarter, versus a $20.07 billion loss in the prior-year period. XOM’s EPS was $2.08, versus a $4.70 loss per share in the year-ago period.
The $6.56 consensus EPS estimate for fiscal 2022, ending Dec.31, 2022, represents a 21.9% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to rise 18.6% year-over-year to $338.79 billion. XOM’s EPS is expected to grow at a rate of 5.8% per annum over the next five years. XOM’s shares gained 25% in price last month.
Toyota Motor Corporation (TM)
Headquartered in Toyota, Japan, TM manufactures and sells motor vehicles and related parts and accessories worldwide. The company operates through three segments—Automobile; Finance; and other business. It provides robots, basic research projects, marine and agribio businesses. In addition, the company operates GAZOO.com, a web portal for automobile information. It has a $273.76 billion market capitalization.
On Feb. 7, 2022, TM and Fukuoka City signed a partnership agreement that aims at the early realization of a hydrogen-powered society. The companies will work closely with Commercial Partnership Technologies Corporation (CJPT) and develop and promote hydrogen-engines and commercial vehicles. As a promising energy type to achieve carbon neutrality, TM is seeking ways to make hydrogen more familiar to residents, encouraging its sustainable and practical use., In the future, the companies will work together to develop and verify technologies related to producing, transporting, and using hydrogen.
For its fiscal year 2022 second quarter, ended Sept. 30, 2021, TM’s total sales revenue increased 11.4% year-over-year to ¥7.55 trillion ($65.56 billion). The company’s operating income came in at ¥749.98 billion ($6.52 billion), representing a 48.2% rise
from the prior-year period. Its net income came in at ¥638.52 billion ($5.55 billion), representing a 32.5% year-over-year improvement. And as of September 30, 2021, GLW had cash and cash equivalents of ¥4.95 trillion ($43.05 billion).
Analysts expect the company’s EPS to increase 29.1% year-over-year to $18.95 in fiscal 2022, ending March 31, 2022. It surpassed the Street’s revenue estimates in each of the trailing four quarters. TM's shares gained 7.8% in price last month.
Chevron Corporation (CVX)
With a $261.94 billion market capitalization, CVX in San Ramon, Calif., provides administrative, financial, management, and technology support for companies engaged in integrated energy, chemicals, and petroleum operations worldwide. Operating in Upstream and Downstream business segments, the company produces and transports crude oil and natural gas.
On Dec. 9, 2021, CVX’s Chevron Shipping Company joined the Sea Cargo Charter, a benchmark initiative for responsible shipping activities, transparent greenhouse gas reporting, and improved decision-making in line with United Nations decarbonization targets. Chevron Shipping Company will contribute to Sea Cargo Charter’s goal to reduce shipping’s total annual greenhouse gas emissions by at least 50% of 2008 levels by 2050.
CVX’s total revenues and other income for its fiscal 2021 fourth quarter, ended Dec. 31, 2021, increased 90.6% year-over-year to $48.13 billion. The company’s pre-tax income came in at $6.99 billion, versus a $957 million loss per share in the year-ago period. While its adjusted net income increased 1550% year-over-year to $4.92 billion, its adjusted EPS increased 1500% to $2.56. The company had $5.64 billion in cash and cash equivalents as of Dec. 31, 2021.
The $10.41 consensus EPS estimate for its fiscal 2022, ending Dec.31, 2022, represents a 28% rise from the prior-year period. It achieved the Street’s EPS estimates in three of the trailing four quarters. And analysts expect CVX’s revenue to increase 7.2% year-over-year to $174.09 billion for the same fiscal year. CVX stock gained 11.8% in price last month.
Wells Fargo & Company (WFC)
San Francisco’s WFC is a diversified financial services company that provides banking, investment, mortgage, and consumer and commercial finance products and services internationally. The company offers other financial planning, private banking, investment management, and fiduciary services. It had a market capitalization of $218.89 billion.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, WFC’s total revenue increased 12.8% year-over-year to $20.86 billion. The company’s pre-tax income came in at $8.11 billion for the quarter, marking a 109.8% year-over-year improvement. Its net income came in at $5.75 billion, indicating an 86% rise from the prior-year period. And WFC’s EPS increased 109.1% to $1.38. It had total cash, cash equivalents, and restricted cash of $234.23 million as of Dec. 31, 2021.
WFC surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a 118.9% rate per annum over the next five years. WFC stock gained 11.9% in price last month and ended Friday’s trading session at $56.33.
MA shares were trading at $377.08 per share on Monday afternoon, down $5.12 (-1.34%). Year-to-date, MA has gained 5.08%, versus a -5.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
5 Best Performing Mega-Cap Stocks in January StockNews.com
