Markets

5 Large-Cap Stocks Delivering Big Earnings Surprises

As equity markets across the world shrugged off the heinous terrorist strikes in Paris by restoring active trading, Wall Street led the way with some positive rallies in share prices. With the Fed likely to raise the interest rates soon, the market is poised to test investor patience with a topsy-turvy run, given the slowdown in China and persistent weakness in the oil & gas sector.

Amid such an erratic stock market, earnings performance has emerged as a crucial factor for determining the stock's performance. Speculations regarding earnings beat or miss have become a fundamental concern for investors that can either cheer or upset to the point of a hasty sell-off. Considered Wall Street's dirty little secret, the formidable importance of earnings surprises can just not be ignored, whether you like it or not.

But from a broader perspective, it is the analysts' consensus about the inherent strength of companies, coupled with their earnings performance, which should be closely followed for gaining better understanding about how to boost one's portfolio.

Why Root for the Large Caps?

Treading the path directed by market reviewers, investing in large-cap companies is a safe bet during economic downturns and stringent credit conditions. Many consider large-cap stocks a quintessential part of their portfolio, given the stability, healthy dividends and safety cushion they offer.

Per a Goldman Sachs report, out of the 500 companies in the S&P 500 index, 2015 belonged to top 1% of the companies hands down, as their collective returns accounted for more than the entire year-to-date return of the index. So the issue is not to scout the advantages of small-cap versus big-cap, but about finding the perfect permutation of factors in 5 large stock companies that can seal the deal.

Perhaps the biggest reasons for investing in large-cap companies at the moment come from rampant uncertainty in markets. Industry reports indicate that the looming fear of interest rate hikes makes credit availability a pressing worry for companies, which in turn, brighten the prospects for large-cap companies in 2016.

Perfecting the Permutation

Therefore, during these lackluster times, it becomes increasingly important to locate large cap stocks with solid earnings surprise performance. Let us make the screening process even easier for you:

In order to choose stocks with great growth prospects, we first used the Zacks Screener to find companies with a market cap of more than $10 billion. Then we added the criterion of an average Earnings ESP of greater than 10. Finally, we included the Zacks Rank condition to find the perfect stocks for your portfolio.

5 Blue-Chip Stocks Delivering Huge Surprise

Dow Chemical CompanyDOW : Based in Michigan, The Dow Chemical Company is the second-largest chemical manufacturer in the world, offering a range of chemical, plastic and agricultural products and services.

The company, with a market cap of $59.84 billion, has consistently beaten estimates in all four trailing quarters, registering a healthy average beat of 16.41%. This Zacks Rank #2 (Buy) company also has long-term earnings growth expectation of 7.6%.

Carnival CorporationCCL : This Florida-based multinational cruise company, enjoys a solid reputation for offering best-in-class cruise vacations across the globe. The company operates cruise brands like Carnival Cruise Line, Holland America Line, P&O Cruises and Costa Cruises across Europe, Australia, America and Asia. Currently operating more than 100 ships, the firm is scheduled to deliver 7 new ships during 2015-2017.

With a market cap of $29.96 billion and long-term growth expectation of 19.6%, this stock carries a Zacks Rank #2. It also boasts positive surprises in each of the last 4 quarters with an average beat of 56.99%.

The Boeing CompanyBA : Headquartered in Chicago, this is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. Its customers include domestic and foreign airlines, the U.S. Department of Defense (DoD), the Department of Homeland Security, the National Aeronautics and Space Administration (NASA), other aerospace prime contractors, and certain U.S. government and commercial communications customers.

With a market capital of $ 96.76 billion, the company boasts positive surprises in each of the last 4 quarters with an average beat of 12.41%. Encouragingly, it also has a Zacks Rank #2 and a long-term growth rate expectation of 11.25%.

AmazonAMZN : This Seattle-based company is one of the largest online global retailers, with extensive operations in North America. The company offers its consumers variety, convenience and free delivery of goods as displayed on its websites.

With a market capital of $303.67 billion, Amazon is undoubtedly one of the frontrunners in the contemporary financial market. It has also beat estimates consistently in the past four trailing quarters, with a stellar average beat of 147.97%. This Zacks Rank #2 stock has long-term earnings growth expectation of 35.58%.

AmerisourceBergen

Chesterbrook, PA-based AmerisourceBergen ABC is one of the world's largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes.

The company has a market capitalization of $36.32 billion and has an average earnings surprise of 11.28%. Also, it boasts a Zacks Rank #2 and has long-term earnings growth expectation of 15%.

Moving Forward

In order to triumph over the difficulties in the current global scenario, it is crucial to maintain a well-balanced portfolio. These stocks may help you combat the ongoing wave of volatility by rallying strongly in the months ahead. So hold tight and fasten your seat belts as these high-fliers ride the turbulent times and emerge victorious with healthy growth prospects.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

DOW CHEMICAL (DOW): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

CARNIVAL CORP (CCL): Free Stock Analysis Report

AMERISOURCEBRGN (ABC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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