3 Top-Ranked Large Caps to Buy for a Steady Approach
Large-cap stocks are present in almost every portfolio. They carry a well-established nature, have greater analyst coverage, and commonly pay dividends, all of which make them so popular.
Of course, their steady nature may not appeal to all. Still, the decreased volatility large-caps possess is well worth it in the eyes of more conservative investors.
For those seeking large-cap exposure, three stocks – Arch Capital Group ACGL, PACCAR PCAR, and Aflac AFL – have all seen their near-term outlooks shift positively. Let’s take a closer look at each.
Arch Capital Group
Arch Capital Group writes insurance, reinsurance, and mortgage insurance worldwide. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations moving higher across the board.
Image Source: Zacks Investment Research
ACGL shares aren’t expensive given its forecasted growth, with consensus expectations for its current fiscal year suggesting 60% earnings growth on 32% higher sales. Shares presently trade at a 10.7X forward earnings multiple (F1), nicely beneath the 12.5X five-year median.
The company’s revenue growth has been strong, as we can see in the annual chart below.
Image Source: Zacks Investment Research
It’s worth noting that Arch Capital has been a stellar earnings performer, exceeding the Zacks Consensus EPS Estimate by an average of 35% across its last four releases. Just in its latest print, ACGL posted a 50% EPS beat and posted revenue 2% ahead of expectations.
PACCAR
PACCAR, a current Zacks Rank #2 (Buy), is a global leader in the design, manufacture, and customer support of high-quality premium trucks. Analysts have taken their earnings expectations higher across all timeframes.
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Like ACGL, it’s hard to ignore the company’s forecasted growth, with consensus expectations for its current fiscal year (FY23) suggesting 56% earnings growth on 20% improved sales. Growth cools in FY24, as expectations allude to an 18% pullback in the bottom line on modestly lower sales.
Image Source: Zacks Investment Research
Shares also provide a passive income stream, currently yielding a respectable 1.2% annually. While the yield may not entice all, the company’s 5% five-year annualized dividend growth rate helps to pick up the slack nicely.
Aflac
Aflac, a current Zacks Rank #2 (Buy), is an American insurance company and a massive supplier of supplemental insurance within the U.S. The company has seen modest positive earnings estimate revisions among all timeframes.
Image Source: Zacks Investment Research
Like ACGL, Aflac has consistently posted bottom line results above expectations, exceeding the Zacks Consensus EPS Estimate by an average of 15% across its last four releases. Just in its latest print, Aflac posted a 28% EPS beat and reported sales nearly 11% above the consensus.
In addition, the company is a member of the elite Dividend Aristocrats group, reflecting its commitment to shareholders through a minimum of 25+ years of increased payouts. AFL shares currently yield a solid 2.1% annually, with a payout ratio sitting sustainably at 30% of its earnings.
Please note that the chart below is on an annual basis.
Image Source: Zacks Investment Research
Bottom Line
Large caps are found in nearly every portfolio, as their stable nature and successful track records are impossible to ignore.
And for those seeking large-cap exposure, all three stocks above – Arch Capital Group ACGL, PACCAR PCAR, and Aflac AFL – could be great considerations, all boasting improved earnings outlooks.
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PACCAR Inc. (PCAR) : Free Stock Analysis Report
Aflac Incorporated (AFL) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report