4 Top Rated Large-Cap Stocks with More Room to Run in 2021: Apple, Microsoft, Alphabet, and Taiwan Semiconductor
December 30, 2020 at 06:57 AM EST
Large-cap stocks are famous for providing stable returns with relatively low risk. And because the financial markets are expected to remain uncertain next year for several reasons, it might be wise for investors to now add a few large-cap stocks to their portfolios that still have plenty of upside. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), and Taiwan Semiconductor Manufacturing (TSM) we think top the list of such stocks.
Large-cap stocks are popular with investors that are looking for sustainable returns with relatively lower risk. As these are typically long-established companies that are dominant in their industries, their stocks usually withstand short-term market fluctuations better than their smaller counterparts.
Large-cap stocks in the technology industry have performed especially well this year due largely to a growing demand for technological solutions driven by an ongoing digital transformation and a trend in remote working and education. This is evident in the Dow Jones U.S. Technology Index’s 46.2% returns year-to-date.
As markets are expected to remain uncertain next year on based on several factors, such as the efficacy of the COVID-19 vaccination in containing the spread of the virus, and an efficient transition to a Biden administration, it could be wise to pick up large-cap tech stocks such as Apple, Inc. (AAPL), Microsoft Corporation (MSFT), Alphabet, Inc. (GOOGL), and Taiwan Semiconductor Manufacturing Company (TSM). These stocks have delivered solid returns this year and we think still have plenty of upside based on their innovative offerings.
Apple, Inc. (AAPL)
AAPL needs no introduction. In addition to the iPhone and Mac computers, the company provides related software, services, networking solutions, third-party apps, and digital content. AAPL’s stock has gained 83.7% so far this year.
AAPL recently launched its AirPod Max headphones, which is an over-ear alternative to the popular AirPods. The company has also launched a new App Store Small Business Programme, which will limit commissions to 15% for small businesses that have revenue of less than $1 million per year. AAPL also recently announced that it will be releasing a driverless electric car. This driverless car is expected to have a 2024 release date and has the potential to be a gamechanger for AAPL.
For the quarter ended September 30, 2020, the company saw an increase in net sales of 1.02% versus the same period last year. AAPL’s net sales from the Americas increased 4.7% during the same period.
AAPL is expected to see revenue growth of 25.1% for the quarter ended March 31, 2021 and 14.9% in 2021. The company’s EPS is estimated to grow 21.3% in 2021 and at a rate of 12.6% per annum over the next five years.
How does AAPL stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
A for Overall POWR Rating
The stock is also ranked #1 of 30 stocks in the Technology – Hardware industry.
Microsoft Corporation (MSFT)
Microsoft is one of the most well-known companies in the world for its PC operating systems. The company also provides cloud computing solutions under Microsoft Azure. MSFT’s stock has risen 42.1% year-to-date.
The company’s Microsoft Teams has been a highly popular collaboration platform for remote workers around the world. MSFT recently announced a holiday-themed update to the platform that features the availability of breakout rooms. The company has also launched a slew of new features in its Microsoft 365 product , including new templates for MS Office apps, Microsoft Family Safety, and Money in Excel.
For the quarter ended September 30, 2020, MSFT saw an increase in revenue of 12% compared to the same period last year. The company’s net income has increased 30% during the same period.
MSFT’s revenue is estimated to increase 10.5% for the quarter ended March 31, 2021 and 10.7% in 2021. And its EPS is expected to rise 17.4% in 2021 and 14.5% per year over the next five years.
MSFT’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank. It is also ranked #1 of 98 stocks in the Software – Application industry.
Alphabet, Inc. (GOOGL)
GOOGL offers a wide range of web-based solutions such as Google Search, News, Gmail, Google Docs, and more. The company also provides cloud computing solutions through Google Cloud. GOOGL’s stock price has increased 31.2% year-to-date.
GOOGL has been working on upgrading its virtual meetings solutions through Google Meet and Google Duo. New features launched include noise cancellation, background blur, low-light mode, and live captions in five languages. The company has also launched AppSheet from Google Cloud, which allows users to build custom applications without the need to code.
For the quarter ended September 30, 2020, the company saw an increase in revenue of 20% year-over-year. The company’s operating margin increased 23% during the same period.
GOOGL’s revenue is expected to grow 18.2% for the quarter ended March 31, 2021 and 21.3% in 2021. Its EPS growth is expected to be 18.7% in 2021 and 16.5% per annum over the next five years.
It is no surprise that GOOGL has a “Strong Buy” in our POWR Ratings systems with a grade of “A” in Trade Grade, Buy & Hold Grade, and Industry Rank. In the 61-stock Internet industry, GOOGL is ranked #3.
Taiwan Semiconductor Manufacturing Company (TSM)
TSM is involved in the development, manufacturing, and marketing of integrated circuits and other semiconductor-based devices. TSM is the first company to provide seven nanometer and five nanometer chip production capabilities. TSM’s stock has gained 81.7% year-to-date.
The company has recently introduced TSMC 3DFabric, which is a family of 3D Silicon Stacking and Advanced Packaging technologies. In addition, TSM is opening a new manufacturing plant in the United States and is hiring more than 600 engineers and executives to staff the plant.
For the quarter ended September 30, 2020, TSM has announced a 21.6% increase in revenue year-over-year. The company’s net income has increased 35.9% during the same period.
TSM’s revenue growth is expected to be 10.8% for the quarter ended March 31, 2021 and 11.5% for 2021. And its EPS growth is expected to be 5.3% in 2021 and 19.7% per annum over the next five years.
TSM’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, Peer Grade and Industry Rank. It is ranked #1 of 87 stocks in the Semiconductor & Wireless Chip industry.
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AAPL shares were trading at $134.82 per share on Wednesday morning, down $0.05 (-0.04%). Year-to-date, AAPL has gained 84.98%, versus a 17.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.4 Top Rated Large-Cap Stocks with More Room to Run in 2021: Apple, Microsoft, Alphabet, and Taiwan Semiconductor appeared first on StockNews.com