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jlmarcus (< 20)

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6 Large Cap Stock picks



May 24, 2018 – Comments (0) | RELATED TICKERS: AAPL , V , HD

The DJIA 30 year average return is approximately 10% and the S&P 500 last 90 year average return is 9.8%. There are a few companies that have well outperformed these averages. These are great solid companies that I believe will continue in the future. We all know these companies well and probably have been recommended before, but they are solid companies that would enhance anyone’s portfolio. They are in order from highest 30 year return to lowest starting with Apple (APPL) 40.63%, Microsoft (MSFT) 35.99%, United Health (UNH) 35.75%, Nike (NKE) 26.22%, Intel (INTC) 24.19%, and Visa (V) only has data for a 9 year return of 30.29%

In order to not sound redundant all these companies have consistent free cash flow (money that’s left over after all the bills are paid and won’t harm the company if taken out), pays dividends, all have good economic moats (the ability to keep competitors at bay) and have good growth rates. All the companies have the ability to maintain a good company long term. Below is a list of the positives and negatives of each company.

Apple pays a really great dividend, my only concern is they have higher debt than I prefer, but they do have the ability to pay it off if necessary. What I like about Microsoft is their ability to pay off short term debt a little over two times, but in 2017 the “Goodwill” of the company on the accounting line went up from $17,872,000 to $35,122,000. United Health also has high debt, but have really low operating margins. Nike has nice clean financials and low debt. The only thing that stood out was the CEO got a Huge increase in pay in 2016 and went back to normal in 2017 even though the performance of the company seemed to stay the same. Intel is not growing big, but it’s steady. The 30 year average return is high, but their Return on Assets and Return on Equity are declining. Even though Visa only had a 9 years to base the average return it’s doing really well and wanted to add it to the list of great large companies to own. My only concern with Visa is their operating margin is high even for the credit services industry, but their Return on Assets and Return on Equity is steadily increasing.  

When searching for great companies to own instead of stocks is they differsify themselves. A company or two will stand out above the rest and remembering to buy these companies in a bear market will only help increase your return. I do not have any affiliation with these companies. Keep an eye out for the list of Mid Cap companies to own.   

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