Growing concerns over the Federal Reserve’s aggressive rate hikes later this year to combat high inflation, escalating sanctions on Russia upon its continued invasion of Ukraine, detection of a new COVID-19 variant, and deepening supply chain constraints have been causing immense volatility in the stock market.
As these factors are expected to keep the market volatile in the near term, large-cap stocks should gain significant investor attention because of their ability to generate stable returns irrespective of the market conditions. Moreover, the ongoing efforts to address supply chain issues and increased focus on enhancing domestic production should benefit large-cap stocks more than their smaller counterparts in the coming months. Investors’ interest in this space is evident from the SPDR S&P 500 Trust ETF’s (SPY) 4.7% returns over the past month.
Despite the possibility of continuing market weakness, Wall Street analysts expect broad market reach and solid growth attributes to allow large-cap stocks Meta Platforms, Inc. (FB), Alibaba Group Holding Limited (BABA), AstraZeneca PLC (AZN), Applied Materials, Inc. (AMAT), and Salesforce.com, inc. (CRM) to deliver more than 40% returns in the coming months.
Meta Platforms, Inc. (FB)
With a $590.78 billion market capitalization, FB develops social media applications to connect through mobile devices, personal computers, virtual reality headsets, and in-home devices worldwide. The company operates through two segments ─ Family of Apps (FoA); and Reality Labs (RL). Its products include Facebook, Instagram, Messenger, WhatsApp, and Oculus.
On April 7, 2022, FB’s financial arm, Meta Financial Technologies, announced plans to create its own virtual currency or an in-app token for the metaverse, nicknamed "Zuck Bucks", as part of a suite of products designed to reduce the platforms’ dependence on advertising, while revitalizing its user base. The company has plans to integrate NFTs into its social media apps like “social tokens” or “reputation tokens”, which could be used as rewards by users, and “creator coins” for influencers on Instagram. In May, the company will launch a pilot initiative to allow users to upload and share NFTs on Facebook. FB should witness an expanding user base in the coming months.
For its fiscal 2021 fourth quarter ended December 31, 2021, FB’s revenue increased 20% year-over-year to $33.67 billion. As of December 31, 2021, the company had $16.60 billion in cash and cash equivalents.
The company surpassed Street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $132.20 billion for fiscal 2022 ending December 31, 2022, indicates a 12.1% year-over-year improvement. The company’s EPS is expected to grow at an 18.5% rate per annum over the next five years.
FB’s revenue and total assets have grown at CAGRs of 28.3% and 19.5%, respectively, over the past three years. The stock has gained 15.4% over the past month and closed yesterday’s trading session at $216.46.
Of the 46 Wall Street analysts that have rated the stock, 32 have rated it a Buy, while 13 rated it a Hold. Analysts expect the stock to hit $325.60 in the near term, representing a 50.4% upside potential.
Alibaba Group Holding Limited (BABA)
Based in China, BABA provides technology infrastructure and marketing reach to merchants, brands, retailers, and other businesses to engage with their users and customers internationally. The company operates through China commerce; International commerce; Local consumer services; Cainiao; Cloud; Digital media and entertainment; and Innovation initiatives and other segments. It has a market capitalization of $278.84 billion.
On November 16, 2021, BABA’s Alibaba Cloud fully migrated all of BABA’s systems and operations onto the cloud ahead of its 11.11 Global Shopping Festival, which was seen to have reduced computing resources by 50% for every 10,000 transactions compared to last year. Computing efficiency was also greatly improved with a boost of 20% in technology deployment efficiency and 30% in CPU resource utilization. This offering of ‘green computing power’ will help merchants make online shopping more engaging and enable BABA to meet the rising demand for a low-carbon digital transition.
BABA’s sales for its fiscal 2021 third quarter ended December 31, 2021, increased 9.7% year-over-year to $38.07 billion. As of December 31, 2021, the company had $46 billion in cash and cash equivalents.
Analysts expect BABA’s revenue to improve 12.6% year-over-year to $150.53 billion for fiscal 2023 ending March 31, 2023. The company’s EPS is expected to grow at a 16.9% rate per annum over the next five years.
Over the past three years, BABA’s revenue and total assets have grown at CAGRs of 34.3% and 24.3%, respectively. BABA has gained 17.1% over the past month and ended yesterday’s trading session at $101.55.
Among 17 Wall Street analysts rating the stock, 16 have rated it a Buy. BABA’s average price target of $174.12 represents a 71.5% upside potential.
AstraZeneca PLC (AZN)
With a market capitalization of $213.79 billion, AZN is a Cambridge-based biopharmaceutical company that focuses on the discovery, development, and commercialization of prescription medicines in the areas of oncology, cardiovascular, renal, and metabolism, respiratory, infection, neuroscience, and autoimmunity worldwide. The company serves primary care and specialty care physicians through distributors and local representative offices.
On March 29, 2021, AZN’s Ondexxya received approval from the Japanese Ministry of Health, Labor, and Welfare after rapidly reversing the anticoagulant effect of FXa inhibitors apixaban, rivaroxaban, or edoxaban in patients experiencing an uncontrolled bleed during the ANNEXA-4 Phase III clinical trial. Ondexxya received approval by the US FDA under the accelerated approval pathway in May 2018 and conditional approval by the European Commission in April 2019. This should allow Ondexxya to gain more market reach in the coming months.
For its fiscal 2021 fourth quarter ended December 31, 2021, AZN’s total revenue increased 62.1% year-over-year to $12.01 billion. The company’s gross profit came in at $7.39 billion, indicating a 25% year-over-year improvement. It had $6.33 billion in cash and cash equivalents as of December 31, 2021.
Analysts expect the company’s EPS to grow 67.2% from the prior-year period to $4.43 for fiscal 2022, ending December 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $43.38 billion for the same fiscal year indicates a 15.9% year-over-year improvement. AZN’s EPS is expected to grow at a 15.7% rate per annum over the next five years.
Over the past three years, AZN’s revenue and total assets have grown at CAGRs of 19.2% and 20.2%, respectively. The stock has gained 17.1% over the past month and closed yesterday’s trading session at $70.63.
Of the three Wall Street analysts rating the stock, two have rated it a Buy, while one rated it a Hold. Analysts expect the stock to hit $101 in the near term, representing a 43% upside potential.
Applied Materials, Inc. (AMAT)
With a $103.37 billion market capitalization, AMAT provides material engineering solutions for semiconductor chips to electronic manufacturers of flat panel displays, solar photovoltaic cells, and modules. The company also supplies equipment to produce coatings for flexible electronics, packaging, and other applications.
On December 23, 2021, AMAT and the Institute of Microelectronics (IME), a research institute of Singapore’s Agency for Science, Technology, and Research (A*STAR), announced a new phase of their research collaboration at the Center of Excellence in Advanced Packaging in Singapore. As chipmakers and systems companies demand heterogeneous design and advanced packaging solutions, the offering of heterogeneous chip integration with hybrid bonding technology and other emerging technologies will help meet the demand for reduced wiring distances, increased I/O density, improved power efficiency, and greater efficiency system performance.
AMAT’s net sales for the fiscal 2022 first quarter ended January 30, 2022, increased 21.5% year-over-year to $6.27 billion. The company’s non-GAAP gross profit came in at $2.97 billion, indicating a 25.2% year-over-year improvement. Its non-GAAP operating income came in at $1.99 billion, up 32.7% from the prior-year period. While its non-GAAP net income increased 32.3% year-over-year to $1.70 billion, its non-GAAP EPS grew 36% to $1.89. As of January 30, 2022, the company had $5.26 billion in cash and cash equivalents.
Analysts expect AMAT’s EPS to improve 18.9% year-over-year to $8.13 for its fiscal 2022, ending October 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $26.55 billion for the same fiscal year represents a 15.1% rise from the prior-year period. The company’s EPS is expected to grow at a 16.5% rate per annum over the next five years.
Over the past three years, AMAT’s revenue and total assets have grown at CAGRs of 14.2% and 10.4%, respectively. AMAT has lost 6% over the past month and ended yesterday’s trading session at $116.24.
Of the 15 Wall Street analysts rating the stock, 11 have rated it a Buy, while four rated it a Hold. The average price target of $176.64 represents a 52% upside potential.
Salesforce, Inc. (CRM)
With a $195.55 billion market capitalization, CRM provides enterprise cloud computing solutions that focus on customer relationship management to businesses and industries worldwide. Its solutions include sales force automation, customer service and support, marketing automation, digital commerce, community management, analytics, and a cloud platform for building custom applications.
On April 5, 2022, Bose Corporation, a premium audio equipment manufacturing company, announced the deployment of CRM’s Salesforce Customer 360 to expand its robust direct-to-consumer business by providing personalized and tailored experiences. Specifically, Bose will deploy CRM’s Commerce Cloud to accelerate revenue growth and drive digital sales, MuleSoft to connect Bose's back-end systems, and Einstein to drive hyper-personalization across channels. This should further nurture CRM’s partnership with Bose in the long term.
For its fiscal year 2022 fourth quarter ended January 31, 2022, CRM's total revenues increased 25.9% year-over-year to $7.33 billion. The company’s gross profit came in at $5.31 billion, representing a 22.5% rise from the prior-year period. CRM’s non-GAAP income from operations came in at $1.10 billion for the quarter, representing a 7.7% year-over-year improvement. It had $5.46 billion in cash and cash equivalents as of January 31, 2022.
The consensus EPS estimate of $32.08 billion for fiscal 2023 ending January 31, 2023, indicates a 21.1% year-over-year improvement. AMAT surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to grow at a 15.1% rate per annum over the next five years.
CRM’s revenue and total assets have grown at CAGRs of 25.9% and 45.8%, respectively, over the past three years. The stock has lost 1.2% over the past month and ended yesterday’s trading session at $195.45.
Of the 27 Wall Street analysts rating the stock, 23 have rated it a Buy, while four rated it a Hold. Analysts expect the stock to hit $300.46 in the near term, representing a 53.7% upside potential.
FB shares were trading at $214.38 per share on Tuesday afternoon, down $2.08 (-0.96%). Year-to-date, FB has declined -36.26%, versus a -7.29% 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.
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