Companies with more than $200 billion in equity market capitalization are considered mega-cap companies. These companies are generally characterized by strong brand recognition and a presence in numerous countries worldwide. They are typically industry leaders with a proven track record. Such companies have solid financials and cash balances, which help them to remain stable even during an economic downturn.
Last month, the major stock market indexes experienced choppiness due to the Fed’s decision to increase interest rates multiple times this year and to the rising geopolitical tensions between the U.S. and Russia over Ukraine. According to a DataTrek Research analysis, the hawkish Fed stance means that the U.S. equities will continue experiencing volatility like January. Mega-cap businesses are well known for their pricing power and are considered safe investment bets amid market volatility.
So, we think quality mega-cap stocks Alphabet Inc. (GOOGL), Meta Platforms, Inc. (FB), and NIKE, Inc. (NKE) could be great additions to one’s watchlist. Wall Street analysts expect these stocks to rally more than 18% in price in the near term.
Alphabet Inc. (GOOGL)
Mountain View, Calif.-based GOOGL is the holding company behind Google and Other Bets. Google’s segments include Google Services and Google Cloud. Its products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Search, and Youtube. It has a market capitalization of $1.96 trillion.
On Jan. 14, 2022, GOOGL subsidiary Waymo, an autonomous driving technology development company, announced that it had signed a multi-year deal with J.B. Hunt Transport Services, Inc. (JBHT) to haul freight using autonomous trucks in Texas. As driver shortages become acute, the demand for autonomous trucks is expected to rise over the midterm.
GOOGL’s revenue for its fiscal fourth quarter ended Dec. 31, 2021, increased 32.3% year-over-year to $75.32 billion. The company’s operating income increased 39.8% year-over-year to $21.88 billion, while its net income increased 35.5% to $20.64 billion. Also, its EPS increased 37.6% year-over-year to $30.69.
Analysts expect GOOGL’s EPS for its fiscal 2023 to increase 17.1% year-over-year to $134.37. Its revenue for the quarter ending March 31, 2022, is expected to increase 22.7% year-over-year to $67.90 billion. Over the past year, the stock has gained 54.2% in price to close the last trading session at $2,960. However, Wall Street analysts expect the stock to hit $3,508.97 in the near term, indicating a potential 18.5% upside.
Meta Platforms, Inc. (FB)
Formerly known as Facebook, Inc., Meta Platforms focuses on building products that enable people to connect and share through mobile devices, personal computers, virtual reality headsets, and in-home devices. The Menlo Park, Calif. Company’s segments include Family of Apps and Facebook Reality Labs. It has a market capitalization of $898.50 billion.
On December 16, the town of Zeewolde approved FB’s plan to build the largest data center in the Netherlands. The data center will run on green energy and is expected to use 1.38 GWh of electricity. The facility will likely help FB serve Facebook, Instagram, and Whatsapp users across Europe.
For its fiscal period ended Dec. 31, 2021, FB’s total revenue increased 37% year-over-year to $117.92 billion. The company’s net income increased 35% year-over-year to $39.37 billion. And its EPS came in at $13.77, versus $10.09 in the year-ago period.
For fiscal 2023, FB’s EPS is expected to increase 20.1% year-over-year to $17.03. Its revenue for the quarter ending March 31, 2022, is expected to increase 27.4% year-over-year to $30.15 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. The stock has declined 8.2% in price over the past six months to close the last trading session at $323. However, Wall Street analysts expect the stock to hit $402.86 in the near term, indicating a potential 24.7% upside.
NIKE, Inc. (NKE)
Famous footwear manufacturer NKE in Beaverton, Ore., designs, markets, and distributes athletic footwear, apparel, equipment, and accessories for sports and fitness activities. Its brand product offerings are in Running, Basketball (the Jordan brand), Football, Training, and Sportswear. It has a market capitalization of $235.15 billion.
On Dec. 13, 2021, NKE announced the acquisition of RTFKT. This brand has leveraged the latest in-game engines, NFTs, blockchain authentication, and augmented reality to create one-of-a-kind virtual products and experiences. NKE President and CEO John Donahoe said, “This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming, and culture.”
NKE’s revenues increased 1% year-over-year to $11.40 billion for the second quarter, ended Nov. 30, 2021. The company’s net income increased 6.8% year-over-year to $1.33 billion. In addition, its EPS came in at $0.83, representing a 6.4% increase year-over-year.
Analysts expect NKE’s EPS and revenue to increase 29.7% and 13.9%, respectively, year-over-year to $4.80 and $53.64 billion in fiscal 2023. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past six months, the stock has fallen 11.8% in price to close the last trading session at $148.71. However, Wall Street analysts expect the stock to hit $186.95, indicating a potential 25.7% upside.
GOOGL shares fell $42.00 (-1.42%) in premarket trading Thursday. Year-to-date, GOOGL has gained 2.17%, versus a -3.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
3 Mega-Cap Stocks Wall Street Loves: Nike, Alphabet, and Meta StockNews.com
