The stock market is going through a transition phase. As fears surrounding the COVID-19 pandemic begin to abate gradually, investors are rotating their portfolio sector weightings. But while the expected economic recovery is evoking optimism, there is also an air of uncertainty in the markets. Investors are hopeful that the economy will get back on track supported by government stimulus and an efficacious coronavirus vaccination drive. But, simultaneously, they have concerns about inflationary pressures and an increase in borrowing costs due to rising bond yields.
We believe investors can ride through this situation if they are judicious in their stock selection. While small-cap companies have greater growth potential, large-cap companies offer more stability and transparency. They have resilient business models and are the best bets during transition phases like the current one.
Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), Facebook, Inc. (FB), and Johnson & Johnson (JNJ) have been around for years and have endured the ebb and flow of stock market behavior in most conditions. So, for investors who want to safeguard their portfolios from volatility while enjoying growth, we think these stocks are the ideal picks.
Microsoft Corporation (MSFT)
MSFT has announced the availability of its Azure Migration Program and FastTrack for Azure in India to simplify migration to cloud platforms for organizations. The Azure Migration Program allows organizations to plan and implement Azure migration projects by leveraging Microsoft cloud adoption methodologies, tools, resources, and best practices.
MSFT’s revenue during the second quarter, ended December 31, 2020, climbed 17% year-over-year to $43.1 billion, driven by 23% growth in its Intelligent Cloud business. Its server products and cloud services revenue climbed 26% on a 50% growth in its Azure business. Its EPS for the quarter rose to $2.05 from $1.53 posted in the prior-year period.
Analysts expect MSFT’s revenue for the quarter, ending March 31, 2021, to be $41 billion, representing a 17.2% year-over-year increase. Its EPS is expected to grow at the rate of 16.7% per annum over the next five years.
MSFT has climbed 47.8% over the year to close yesterday’s trading session at $234.81. Over the past six months, the stock has gained 12.5%.
It’s no surprise that MSFT has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
MSFT has a Sentiment rating of A along with Stability and Quality ratings of B. In the D-rated Software – Application industry, it is ranked #15.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the MSFT ratings for Growth, Momentum, and Value.
Alphabet Inc. (GOOGL)
Nokia announced recently that it has partnered with Microsoft, Amazon web services, and Google to develop new cloud-based 5G radio solutions with its radio access network (RNA) technology. The objective of the partnerships is to develop new business cases.
During the fourth quarter, ended December 31, 2020, GOOGL’s total revenue climbed 23.5% year-over-year to $56.9 billion. Its revenue from Google Search climbed 17% to $31.9 billion. Meanwhile, YouTube ads surged 45% year-over-year to $6.9 billion. Its EPS for the quarter rose to $22.30 from $15.35 posted in the same period last year.
Analysts expect GOOGL’s revenue for the quarter ending March 31, 2021 to be $51.4 billion, representing a 24.9% year-over-year rise. Its EPS is expected to grow at the rate of 17% per annum over the next five years.
GOOGL ended yesterday’s trading session at $2054.44, surging 84.4% over the past year. During the past six months, GOOGL has retreated 35.3%.
Due to its bright prospects, GOOGL has an overall A rating, which translates to a Strong Buy. GOOGL has a Sentiment, Quality, and Momentum grade of B. In the 68-stock Internet industry, it is ranked #1.
Click here to see the additional POWR Ratings for GOOGL (Stability, Growth, and Value).
Facebook, Inc. (FB)
FB has entered a multiyear deal with News Corp. in Australia regarding paying Rupert Murdoch’s publishing arm for access to news stories. The deal allows FB users to access news articles and breaking news video from Australia’s News Corp.’s publications from behind a paywall.
During the fourth quarter, ended December 31, 2020, FB climbed 33% year-over-year to $28 billion. Its EPS for the quarter rose to $3.88 from $2.56 posted in the prior-year period. The company’s Daily Active Users (DAU) rose 11% year-over-year to $1.84 billion. Its cash and cash equivalents and marketable securities at the end of December were $61.95 billion.
The ongoing shift towards online commerce and the transition in consumer demand towards products and away from services are the major reasons behind FB’s revenue growth.
Analysts expect FB’s revenue for the quarter, ending March 31, 2021, to be $23.5 billion, representing a 32.6% year-over-year increase. Its EPS is expected to grow at the rate of 21.5% per annum over the next five years.
FB ended yesterday’s trading session at $273.75, rallying 60.8% over the past year. During the past six months, FB edged 0.5% higher.
FB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. FB has a Sentiment and Quality grade of A and a Momentum grade of B. In the 68-stock Internet industry, it is ranked #4.
To see additional POWR Ratings for Growth, Value, and Stability for FB, Click here.
Johnson & Johnson (JNJ)
Pharmaceutical giant JNJ’s Single-Shot COVID-19 Vaccine, developed by its Janssen Pharmaceutical Companies, was granted Emergency Use Listing by the WHO late last month. The data demonstrated that the vaccine is 85% effective in preventing severe symptoms from the disease across all regions studied.
During the fourth quarter, ended December 31, 2020, JNJ’s revenue climbed 8.3% year-over-year to $22.4 billion, driven by the Pharmaceutical segment and increased sales in STELARA, DARZALEX, ERLEADA, and IMBRUVICA. Its EPS for the quarter was $0.65 from $1.50 posted in the prior-year period.
Analysts expect JNJ’s revenue for the quarter ending March 31, 2021 to be $22 billion, representing a 6.3% year-over-year rise. Its EPS is expected to grow at the rate of 5.6% per annum over the next five years.
JNJ ended yesterday’s trading session at $162.42, rising 27.3% over the past year. During the past six months, JNJ has climbed 8%.
Due to its bright prospects, JNJ has an overall B rating, which equates to Buy in our POWR Ratings system. JNJ has a Stability rating of A along with Sentiment and Stability ratings of B. In the 239-stock Medical – Pharmaceuticals industry, it is ranked #10.
Click here to see the additional POWR Ratings for JNJ (Growth, Value, and Momentum).
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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MSFT shares were trading at $237.42 per share on Tuesday afternoon, up $2.61 (+1.11%). Year-to-date, MSFT has gained 6.99%, versus a 5.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
More Resources for the Stocks in this Article
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|MSFT||Get Rating||Get Rating||Get Rating|
|GOOGL||Get Rating||Get Rating||Get Rating|
|FB||Get Rating||Get Rating||Get Rating|
|JNJ||Get Rating||Get Rating||Get Rating|