4 Mega-Cap Stocks to Buy and Hold for Decades

NASDAQ: GOOGL | Alphabet Inc. -  News, Ratings, and Charts

GOOGL – While impressive third-quarter corporate earnings reports and declining jobless claims have been pushing the stock market higher, the continuing spread of the COVID-19 Delta variant, supply chain issues, and rising inflation are raising concerns about a potential market correction in the near term. Against this backdrop, we think buying and holding fundamentally-sound mega-cap stocks Alphabet (GOOGL), Pfizer Inc. (PFE), Abbott Laboratories (ABT), and Accenture plc (ACN) could help dodge short-term market fluctuations and generate solid long-term returns. Let’s discuss.

Solid third-quarter earnings reported by mega-cap companies have driven the major benchmark indexes to fresh highs lately. The Dow Jones rose for the third straight day to hit a new high on October 26. Also that day, the S&P 500 hit a fresh high. Roughly 38% of the S&P 500 members have so far reported third-quarter earnings. Of these companies, 83% have surpassed consensus EPS estimates, while 79% have beaten revenue estimates.

While the robust earnings reports and declining jobless claims are driving the markets higher, factors including surging COVID-19 cases, intensifying supply chain issues, and increasing inflation could soon precipitate a market correction. As such, we think it could be wise to follow a buy-and-hold strategy now.

With a wide market reach, expanding customer base, and impressive day-to-date developments, mega-cap stocks—which possess a market capitalization of more than $200 billion—have the potential to dodge the short-term fluctuations and deliver substantial returns in the long run. As dominant players in their respective industries, and possessing sound fundamentals, Alphabet Inc. (GOOGL), Pfizer Inc. (PFE), Abbott Laboratories (ABT), and Accenture plc (ACN) could be wise bets now.

Alphabet Inc. (GOOGL)

With a $1.87 trillion market cap, GOOGL, through its subsidiaries, provides web-based search, maps, software applications, mobile OS, consumer content, enterprise solutions, commerce, and hardware products to customers worldwide. GOOGL operates through three segments—Google Services; Google Cloud; and Other Bets. It also provides performance and brand advertising services.

On October 12, GOOGL’s Google Cloud and Siemens Energy, one of the world’s leading energy technology companies, announced a new, multi-year collaboration to transform Siemens Energy’s business infrastructure systems digitally, and data with Google Cloud. GOOGL will shift Siemens Energy’s global network of data centers into the cloud, bringing its company-wide SAP systems into a future-proof cloud environment and power-sustainable digital transformation with the industry’s cleanest cloud.

For its fiscal third quarter, ended September 30, 2021, GOOGL’s revenues increased 41% year-over-year to $65.12 billion. The company’s income from operations came in at $21.03 billion, indicating an 87.6% year-over-year improvement. Its net income was $18.94 billion, up 68.4% from the prior-year period. Its EPS increased 70.7% year-over-year to $27.99. The company had $23.72 billion in cash and equivalents as of June 30, 2021.

A $100.78 consensus EPS estimate for the current year indicates a 72% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $250.94 billion for the current year, representing a 37.5% rise year-over-year. MPC’s EPS is expected to grow at a 21% rate per annum over the next five years.

The stock has gained 75.9% in price over the past year and 3.9% over the past three months. It closed yesterday’s trading session at $2786.17.

GOOGL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an A grade for Sentiment, and a B grade for Quality. Click here to see the additional ratings for GOOGL’s Growth, Value, Momentum, and Stability. Of the 78 stocks in the Internet industry, GOOGL is ranked #2.

Click here to check out our Cloud Computing Industry Report for 2021

 

Pfizer Inc. (PFE)

PFE is a pharmaceutical company that offers medicines, vaccines, medical devices, and consumer healthcare products worldwide for oncology, inflammation, cardiovascular, and other therapeutic areas. It serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers. It has a $239.63 billion market cap.

On October 26, the U.S. Food and Drug Administration’s (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted favorably to grant Emergency Use Authorization (EUA) for PFE and BioNTech SE’s (BNTX) COVID-19 vaccine in children 5 to less than 12 years of age. The companies are waiting for authorization from the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) to be the first COVID-19 vaccine available for use in these children in the U.S. The companies expect to gain expanding market reach in the near term.

PFE’s revenue for its fiscal second quarter, ended July 4, 2021, came in at $18.98 billion, representing a 92.4% rise from the prior-year period. The company’s non-GAAP income from operations was $6.11 billion, up 75.5% from the prior-year period. Its non-GAAP net income came in at $6.08 billion, representing a 75.2% improvement from the year-ago period. Its non-GAAP EPS increased 72.6% year-over-year to $1.07. As of July 4, 2021, the company had $2.37 billion in cash and cash equivalents.

A $4.06 consensus EPS estimate for the current year represents an 83.1% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect PFE’s revenue to be $81.56 billion for the current year, representing a 94.6% rise from the prior-year period. The stock’s EPS is expected to grow at a rate of 106.7% per annum over the next five years.

PFE gained 14.9% in price over the past year and 4.2% over the past three months. It ended yesterday’s trading session at $43.56.

PFE’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has an A grade for Value, and a B grade for Growth and Quality. Click here to see the additional ratings for PFE’s Momentum, Stability, and Sentiment. PFE is ranked #9 of 208 stocks in the Medical – Pharmaceuticals industry.

Click here to checkout our Healthcare Sector Report for 2021

Abbott Laboratories (ABT)

With a $226.78 billion market cap, ABT discovers, develops, and sells healthcare products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine. The company operates through four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices. Its products are sold directly to wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers.

On September 29, 2021, the U.S. Food and Drug Administration (FDA) approved ABT’s Amplatzer Talisman PFO Occlusion System to treat people with a patent foramen ovale (PFO) that are at risk of recurrent ischemic stroke. ABT’s PFO closure technology helps prevent blood clots from passing from the right to the left side of the heart and ultimately prevents a stroke. ABT expects to witness high demand for the therapy in the coming months.

For its fiscal third quarter, ended September 30, 2021, ABT’s net sales increased 23.4% year-over-year to $10.93 billion. ABT’s pre-tax income came in at $2.98 billion, up 43% from the prior-year period. While its adjusted net earnings increased 43.1% year-over-year to $2.52 billion, its adjusted EPS increased 42.9% year-over-year to $1.40. The company had $8.66 billion in cash and cash equivalents as of June 30, 2021.

Analysts expect the stock’s revenue to improve 70.2% year-over-year in the current year to $5.87 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $42.15 billion consensus revenue estimate for the current year represents a 21.8% rise from the prior-year period. The company’s EPS is expected to grow at a 12,6% rate per annum over the next five years.

ABT has gained 17.6% in price over the past year and 7.2% over the past three months. It ended yesterday’s trading session at $128.13.

It’s no surprise that ABT has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Sentiment, and a B grade for Stability and Quality. Click here to see the additional ratings for ABT (Growth, Value, and Momentum).

ABT is ranked #17 of 208 stocks in the Medical – Pharmaceuticals industry.

Click here to checkout our Healthcare Sector Report for 2021

Accenture plc (ACN)

Based in Ireland, ACN is a professional services company that provides management and technology consulting services. The company operates through five business groups—Communications, Media, and Technology; Financial Services; Health and Public Service; Products; and Resources. It also provides managed security and cyber defense services (MSS). It has a market capitalization of $224.34 billion.

On October 20, ACN announced a collaboration with MediaMarktSaturn Retail Group, a leading consumer electronics retailer, to transform its content production into a marketing operation focused on driving efficiency and creating ultimate relevance to the customer. ACN is looking forward to benefiting from creating personalized and quality content, consistency, and scale across multiple markets.

ACN’s revenues came in at $13.42 billion for its fiscal fourth quarter, ended August 31, 2021, representing a 23.8% improvement year-over-year. The company’s operating income came in at $1.96 billion, up 26.8% from the prior-year period. Its net income was $1.44 billion for the quarter, representing a 10.1% rise from the year-ago period. And its EPS increased 10.6% year-over-year to $2.20. As of August 31, 2021, ACN had $8.17 billion in cash and cash equivalents.

Analysts expect ACN’s EPS to increase 15.3% year-over-year in the current year to $8.74. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $49.37 billion consensus revenue estimate for the current year represents a 13.4% rise from the prior-year period. The stock’s EPS is expected to grow at a 12.3% rate per annum over the next five years.

The stock has rallied 62.5% in price over the past year and 11.7% over the past three months. It ended yesterday’s trading session at $356.34.

ACN’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system. ACN has a B grade for Momentum, Stability, Sentiment, and Quality.

In addition to the POWR Ratings grades we’ve just highlighted, one can see ACN’s ratings for Growth and Value here. ACN is ranked #4 of 11 stocks in the A-rated Outsourcing – Tech Services industry.


GOOGL shares fell $5.35 (-0.18%) in after-hours trading Wednesday. Year-to-date, GOOGL has gained 66.85%, versus a 22.60% 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. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
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PFEGet RatingGet RatingGet Rating
ABTGet RatingGet RatingGet Rating
ACNGet RatingGet RatingGet Rating

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