With megacap stocks -- those with market capitalization of at least $200 billion -- dropping like stones so far this year, you may be looking for buying opportunities.
Morningstar lists five of them: three in the technology sector and two in the banking industry.
Meta Platforms (META)
Morningstar analyst Ali Mogharabi assigns the social-media giant a wide moat and puts fair value for the stock at $346, more than 2 1/2 times recent trades at $127.
Meta’s “growth in users and user engagement, along with the valuable data that they generate, makes its platforms attractive to advertisers,” he wrote in a commentary.
“The combination of these valuable assets and our expectation that advertisers will continue to shift their spending online bodes well for the firm’s top-line growth and cash flow.”
A recovery to the price target would largely restore the billions of dollars in valuation that CEO Mark Zuckerberg has watched melt away over the course of the year. Wall Street has reacted poorly to the company's soaring spending on its metaverse initiatives.
Alphabet (GOOGL)
Mogharabi gives the search, advertising the cloud stalwart a wide moat and puts fair value at $169. The stock recently traded at $98, so Morningstar's figure indicates 72% upside to fair value.
“Alphabet dominates the online search market, with 80%-plus global share for Google,” he wrote in a commentary.
“We expect continuing growth in the firm’s cash flow, as we remain confident that Google will maintain its leadership in search. We foresee YouTube contributing more to the firm’s top and bottom lines, and we view investments of some of that cash in moonshots as attractive.”
Amazon (AMZN)
Morningstar analyst Dan Romanoff assigns the company a wide moat and puts fair value at $192, 66% above recent trading at $116.
“Amazon dominates its served markets, notably e-commerce and cloud services,” he wrote in a commentary. “It benefits from numerous competitive advantages and has emerged as the clear e-commerce leader.”
Meanwhile, “the firm’s advertising business is already large and continues to scale, offering an attractive option for marketers looking to access a vast audience with a variety of proprietary data points about consumers.”
JPMorgan Chase (JPM)
Morningstar analyst Eric Compton gives the bank a wide moat and puts fair value at $149. The stock recently traded at $119, leaving 25% potential upside to fair value.
JPMorgan Chase "is arguably the most dominant bank in the U.S.,” he wrote in a commentary. It has “leading investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises.”
Moreover, “the bank's combination of scale, diversification, and sound risk management seems like a simple path to competitive advantage, but few other firms have been able to execute a similar strategy.”
Bank of America (BAC)
Compton assigns the bank a wide moat and puts fair value at $40, 17% above recent trades at $34.29.
“Bank of America has emerged as one of the preeminent U.S. banking franchises,” he wrote in a commentary.
“It now has one of the best retail … franchises, is a Tier 1 investment bank, a top four credit card issuer, a top three acquirer, has a solid commercial banking franchise and owns the Merrill Lynch franchise, which has turned into one of the leading brokerage and advisor firms.”
