In this piece, we will take a look at the 12 best large cap stocks to buy now. If you want to skip our introduction to the stock market and the different kinds of stocks that can be traded, then read 5 Best Large Cap Stocks To Buy Now.
Stocks can be divided and segregated by several different criteria. One approach is to sort them through industries, which allows one to tailor an investment approach to the broader economic climate as well as regulatory and governmental incentives that might prove to be catalysts for sectors such as electric vehicles.
Another common approach in classifying stocks is using their market capitalization. The market capitalization of a company is its value calculated after multiplying its total shares outstanding with its current share price. It provides an easy way to gauge the value of a company in the eyes of investors as well as its financial heft demonstrated by the balance sheet. Within the stock market, stocks are classified as micro cap stocks, small cap stocks, large cap stocks, and mega cap stocks. Large cap stocks belong to companies whose market capitalization ranges between $10 billion and $200 billion, and the large cap classification is the final rung on the latter that a firm has to climb before it can be classified as a lucrative mega cap stock.
While few analysts would advise anyone to invest in a stock based truly on its market capitalization, each category of these classifications has its own benefits and drawbacks. For large cap stocks, the potential to make a high percentage return is greater than a mega cap stock, and at the same time, the relative stability of these companies and their higher share prices when compared to small caps also provide a buffer against losses due to adverse business or economic conditions as well as market manipulation and scams.
Data compiled by Stock Analysis shows that as of early November 2023, there are 704 large cap stocks trading on U.S. exchanges. Cumulatively, these have a market capitalization of $29 trillion and total revenue of $16.36 trillion. Compare this to the statistics for small cap stocks and you might be stunned by the difference. This is because the next lower rung on our stock classification ladder, small cap stocks, has a market capitalization of $1.2 trillion and combined revenue of $1.6 trillion. In short, large cap companies have ten times the revenue of small cap companies, and more than twenty times the market capitalization. But what about mega cap stocks? Well, this list of firms made up of big ticket technology names such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) have a combined market capitalization of $21.16 trillion and total revenue of $5.9 trillion.
Looking at this data, it's clear that when lumped together, the large cap segment is the most lucrative on the stock market in terms of both revenue and market capitalization. This is unsurprising really since when compared to the 704 large cap stocks being traded on U.S. stock markets, a rather handful of 37 stocks are classified as mega cap stocks. This lends an average mega cap company $159 billion in revenue while the figure for an average large cap stock is $23.23 billion.
So, what are these large cap companies, and which of these dominate the market capitalization pie? Well, one of the most valuable large cap companies in the world, and one whose market capitalization is on the cusp of making it a mega cap stock is the British pharmaceutical firm AstraZeneca PLC (NASDAQ:AZN). It has $198 billion in market capitalization, and an average share price rating of Strong Buy according to data compiled by Yahoo Finance. Analysts have also priced in a 31% share price upside to the stock. In terms of its products, AstraZeneca PLC (NASDAQ:AZN) has had an active latter half of 2023. One of its biggest announcements came in late October 2023 when it announced that its lung cancer drug performed better than a standard treatment in a Phase 3 trial. AstraZeneca PLC (NASDAQ:AZN) is also slated to release its earnings report soon, and analysts have set an EPS forecast of 79 cents for the firm.
With these details in mind, let's take a look at the best large cap stocks to buy, and some notable names are Advanced Micro Devices, Inc. (NASDAQ:AMD), Netflix, Inc. (NASDAQ:NFLX), and Thermo Fisher Scientific Inc. (NYSE:TMO).
12 Best Large Cap Stocks To Buy Now
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Our Methodology
To compile our list of the best large cap stocks to buy we first compiled the 40 most valuable large cap companies. Then, they were ranked by the number of their hedge fund investors as of June 2023 courtesy of Insider Monkey's 910 fund database and the top large cap stocks are as follows.
Pfizer Inc. (NYSE:PFE) is a global pharmaceutical giant that marks a strong start to our list of the best large cap stocks to buy. The firm recently reported its third quarter financial results, which saw the sales of its coronavirus treatment products drop by as much as 97% annually.
By the end of this year's second quarter, 73 out of the 910 hedge funds part of Insider Monkey's database had bought Pfizer Inc. (NYSE:PFE)'s shares. Out of these, the biggest investor is Ric Dillon's Diamond Hill Capital as it owns 6.9 million shares that are worth $253 million.
Pfizer Inc. (NYSE:PFE) joins Netflix, Inc. (NASDAQ:NFLX), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Thermo Fisher Scientific Inc. (NYSE:TMO) in our list of the best large cap stocks to buy.
Wells Fargo & Company (NYSE:WFC) is one of the biggest banks in America. The firm has been facing a slew of troubles lately, with the latest bit on this front involving an SEC investigation into some of its investment advisory account features.
During Q2 2023, 75 out of the 901 hedge funds tracked by Insider Monkey were the bank's investors. Wells Fargo & Company (NYSE:WFC)'s largest hedge fund shareholder is Natixis Global Asset Management's Harris Associates due to its $1 billion stake.
S&P Global Inc. (NYSE:SPGI) is a financial services firm known best for its S&P500 stock index. The firm's shares are rated Strong Buy on average, and it has an average share price target of $443.80 which prices in a $61 upside to the stock.
Insider Monkey dug through 910 hedge funds for their second quarter of 2023 shareholdings and found 82 S&P Global Inc. (NYSE:SPGI) shareholders. Chris Hohn's TCI Fund Management owns the biggest stake among these which is worth $3.7 billion.
Union Pacific Corporation (NYSE:UNP) is an American railroad transportation services provider. An industrial stock, its fortune depends on the state of the economy and the business environment. This made a 19% profit drop during its third quarter unsurprising, but on a positive note, Union Pacific Corporation (NYSE:UNP) still managed to beat analyst EPS estimates for the quarter.
As of June 2023, 84 among the 910 hedge funds surveyed by Insider Monkey had bought and owned Union Pacific Corporation (NYSE:UNP)'s shares. Out of these, the largest shareholder is Eric W. Mandelblatt's Soroban Capital Partners as it owns $1.6 billion worth of shares.
Intuit Inc. (NASDAQ:INTU) is a financial software services provider that allows businesses to manage their payrolls, accounts, and other processes. Not only has the firm beaten analyst EPS estimates in all four of its latest quarters despite a corporate slowdown, but its shares are also rated Strong Buy on average.
For their investments during this year's June quarter, 86 out of the 910 hedge funds profiled by Insider Monkey were the software company's shareholders. Intuit Inc. (NASDAQ:INTU)'s biggest hedge fund investor in our database is Ken Fisher's Fisher Asset Management due to its $1.2 billion investment.
T-Mobile US, Inc. (NASDAQ:TMUS) is a telecommunications company headquartered in Bellevue, Washington, the United States. The firm is currently busy expanding its 5G footprint across the U.S., and it announced in October 2023 that T-Mobile US, Inc. (NASDAQ:TMUS) 5G can now provide coverage to 99% of Utah's residents.
During 2023's second quarter, 86 out of the 910 hedge funds part of Insider Monkey's database had T-Mobile US, Inc. (NASDAQ:TMUS)'s shares. Out of these, the firm's largest shareholder is Ken Griffin's Citadel Investment Group due to its $847 million stake.
Danaher Corporation (NYSE:DHR) is one of the largest healthcare companies in the world with a whopping 79,000 employees. The firm posted a strong set of third quarter results in October 2023 that saw it beat analyst EPS and revenue estimates, by posting $6.87 billion in revenue and an EPS of $2.02.
During Q2 2023, 89 out of the 910 hedge funds polled by Insider Monkey were the firm's investors. Danaher Corporation (NYSE:DHR)'s biggest stakeholder in our database is Andreas Halvorsen's Viking Global as it owns 4.2 million shares that are worth $1 billion.
Advanced Micro Devices, Inc. (NASDAQ:AMD), Danaher Corporation (NYSE:DHR), Netflix, Inc. (NASDAQ:NFLX), and Thermo Fisher Scientific Inc. (NYSE:TMO) are some top large cap stocks that hedge funds are buying.
