Large-cap stocks represent the giants of the stock market, generally referring to established companies with market caps exceeding $10 billion. These industry leaders offer investors a blend of stability and growth potential, often serving as a cornerstone for diversified portfolios. With proven track records, strong balance sheets, and ability to weather economic turbulence, quality large caps can be a go-to for both seasoned and novice investors seeking reliable returns.
Heading into 2025, Citi analysts have highlighted what they consider the cream of the crop among U.S. large-cap stocks. Scott Chronert, Citi Research’s head of U.S. equity strategy, says their method zeroes in on companies with strong operating leverage and profitability trends, aligning picks with thematic and sector-driven opportunities.
The list is packed with heavyweights, each boasting a market cap of over $15 billion, and all have also been outperforming the broader S&P 500 Index’s ($SPX) gains on a YTD basis. Here’s a closer look at three “Strong Buy”-rated large-cap picks from Citi’s recommendation list that investors can consider for long-term gains.
Large-Cap Stock #1: Amazon
Washington-based e-commerce giant Amazon.com, Inc. (AMZN) has expanded its reach far beyond its retail roots in recent years. Known for revolutionizing e-commerce, Amazon has diversified into entertainment with Amazon Prime Video, Music, Prime Gaming, and Twitch, showcasing its broad influence. The tech giant has also made impressive inroads in cloud computing and artificial intelligence (AI) through its Amazon Web Services (AWS) division, tapping into the skyrocketing demand for cloud solutions and AI.
With a massive market cap of $2.18 trillion, shares of this retail giant are up roughly 35.6% so far this year, outshining the broader SPX’s 25.7% return on a YTD basis.
After Amazon dropped its Q3 earnings report on Oct. 31, which smashed Wall Street’s top- and bottom-line estimates, shares of the retail giant closed up more than 6% in the subsequent trading session. Net sales during the quarter jumped 11% year over year to $158.9 billion, coming in slightly above Wall Street's forecasted $157.3 billion. Earnings per share soared 49.4% annually to $1.43, exceeding estimates by an impressive 25.4% margin.
Amazon continues to impress with strong sales growth across its core segments. The North American division experienced a solid 9% annual increase in sales, reaching a remarkable $95.5 billion. The company’s international footprint also flourished, with sales rising 12% year over year to $35.9 billion. However, it was AWS that truly stole the spotlight, posting a robust 19% annual growth, bringing in an impressive $27.5 billion in revenue.
This surge further cements AWS’ dominance in the rapidly expanding cloud and AI markets, making Amazon an even more formidable force in the global tech landscape. During the quarter, Amazon’s operating income surged a remarkable 56% year over year to reach $17.4 billion, a clear testament to the company's relentless focus on efficiency and cost-cutting.
As of Sept. 30, the company’s free cash flow reached $47.7 billion, up from $21.4 billion during the same period last year, underscoring its ability to generate substantial cash flow. Looking forward to Q4, management anticipates net sales to range between $181.5 billion and $188.5 billion, reflecting growth of 7% to 11% year over year. Also, operating income is expected to land between $16 billion and $20 billion, compared to $13.2 billion in Q4 of fiscal 2023.
Analysts tracking Amazon expect the company’s earnings to climb a robust 86.3% year over year to $5.29 per share in fiscal 2024 and rise another 17.4% to $6.21 per share in fiscal 2025.
Overall, Wall Street is bullish about AMZN stock, with a consensus “Strong Buy” rating. Of the 49 analysts offering recommendations, 45 advise a “Strong Buy,” three suggest a “Moderate Buy,” and one maintains a “Hold.”
The average analyst price target of $236.75 indicates a 15% potential upside from the current price levels, while the Street-high price target of $285 suggests that AMZN could rally as much as 38.5% from here.
Large-Cap Stock #2: CRH plc
Ireland-based CRH plc (CRH) is a global leader in building materials, playing a pivotal role in shaping the infrastructure landscape. With 78,500 employees spread across 3,390 locations in 28 countries, CRH maintains dominant market positions in both North America and Europe. From road construction and utilities to commercial projects and outdoor living solutions, CRH offers a wide range of materials and services designed to foster a more sustainable and resilient built environment.
Valued at around $69.8 billion by market cap, shares of CRH have rallied 64.5% over the past year and 47.4% on a YTD basis, soaring beyond the broader market’s healthy gains during both these time frames.
Apart from its strong price action, the company also appears committed to rewarding its shareholders. During its latest earnings release, CRH declared a quarterly dividend of $0.35 per share, which is set to be distributed to its shareholders on Dec. 18. This upcoming dividend payment represents an annual increase of 5%. With an annualized dividend of $1.40 per share, investors can enjoy an attractive yield of 1.37%, further enhancing the appeal of holding CRH shares.
Additionally, during Q3, the company revealed that it wrapped up its latest share buyback tranche by Nov. 6, bringing the total repurchases so far this year to an impressive $1.2 billion. This includes approximately 4 million shares repurchased in Q3 of 2024 for $300 million.
Looking ahead, the company is launching an additional $300 million buyback, set to be completed by Feb. 26, 2025, reinforcing its commitment to returning value to shareholders.
The building materials company released its Q3 earnings results on Nov. 7, reporting a 3.8% year-over-year rise in revenue to $10.5 billion, along with a 9.4% increase in EPS, which reached $1.97. CRH's overall performance in Q3 was mainly driven by the strategic contributions from acquisitions and effective commercial management, which more than offset the challenges posed by divestitures and weather-related disruptions in certain regions.
During the quarter, CRH made significant strides in expanding its portfolio, completing 12 acquisitions worth a total of $1.4 billion, a notable increase from just $400 million spent during the same period in 2023. The company’s Americas Materials Solutions division led the charge with seven acquisitions, while Americas Building Solutions added three, and Europe Materials Solutions rounded out the acquisitions with two.
As of Sept. 30, CRH reported a strong cash position, with $3.1 billion in cash, cash equivalents, and restricted cash on hand, though slightly lower than the $5.7 billion reported at the same time last year. The company also boasts $4 billion in undrawn committed facilities, providing ample financial flexibility to support future growth and strategic initiatives.
For fiscal 2024, management forecasts adjusted EBITDA to land between $6.87 billion and $6.97 billion, while EPS for the entire year is projected to arrive between $5.45 and $5.55. By comparison, analysts tracking CRH expect the company’s bottom line to reach $5.42 per share in fiscal 2024, up 17.3% year over year, and grow another 11.1% to $6.02 per share in fiscal 2025.
Wall Street appears highly optimistic about CRH stock, with a consensus “Strong Buy” rating overall. Of the 15 analysts offering recommendations, 11 advise a “Strong Buy,” two give a “Moderate Buy,” and the remaining two suggest a “Hold.”
The average analyst price target of $109.86 indicates 7.8% potential upside from the current price levels, while the Street-high price target of $120 suggests that CRH could rally as much as 17.7% from here.
Large-Cap Stock #3: Delta Air Lines
Atlanta-based Delta Air Lines, Inc. (DAL) is a major player in the global aviation industry, offering scheduled air transportation for both passengers and cargo. Founded in 1924, Delta has grown into one of the world’s leading airlines, operating over 4,000 daily flights to more than 280 destinations across six continents.
With a market cap of approximately $41.4 billion, shares of this airline giant have outpaced the broader market’s gains, delivering stellar returns of 77.3% over the past year and 57.9% on a YTD basis.
On Oct. 31, the airline company paid its shareholders a quarterly dividend of $0.15 per share. Also, Delta’s annualized dividend of $0.60 per share offers a modest 0.94% yield.
Despite revealing a mixed picture in its Q3 earnings results on Oct. 10, shares of Delta closed up more than 2% in the next trading session, reflecting investor confidence. During the quarter, the Atlanta-based carrier revealed the financial toll of the CrowdStrike (CRWD)-caused software outage on its Q3 earnings results. The incident led to a direct revenue hit of approximately $380 million, mainly from refunds for canceled flights and compensation through cash, and also reduced EPS by 45 cents.
However, Delta’s top-line performance remained resilient, with revenue climbing slightly year over year to $15.7 billion, beating Wall Street’s $15.3 billion forecast. On the downside, the global outage’s impact on earnings caused the company’s adjusted EPS to plummet nearly 53% compared to the previous year, landing at $1.50, which fell short of analysts’ forecasts.
Delta’s strong cash generation has been a key driver in its financial progress, allowing for $2.4 billion in debt repayment YTD, and bringing its gross leverage to under 3 times. Adjusted operating cash flow for the quarter was $1.3 billion, while free cash flow came in at $95 million. The company also reached a significant milestone in Q3 with an upgrade to investment-grade status from Fitch, signaling stronger financial stability and a reduced risk for investors.
Despite the challenges posed by the July outage, management remains highly optimistic. CEO Ed Bastian highlighted, “We expect our December quarter pre-tax profit to grow 30 percent over last year to $1.4 billion, which would mark one of the most profitable fourth quarters in our history."
Management anticipates EPS for the upcoming quarter to range between $1.60 and $1.85. Analysts tracking Delta Air Lines forecast the company’s earnings to drop slightly year over year to $6.07 per share in fiscal 2024 before rising 18.1% to $7.17 per share in fiscal 2025.
DAL has a unanimous “Strong Buy” rating from all 20 analysts covering the stock.
The average analyst price target of $71.79 indicates about 12.8% potential upside from the current price levels. However, the Street-high price target of $100 suggests that DAL could rally as much as 57.2% from here.
