Volatility has been the watchword for the past week as the Chinese outbreak of coronavirus dominated headlines.
The real issue here is less the death toll (which is not insignificant) but the challenges it brings at all levels of the second-largest economy in the world.
Remember, China has factories that many other nations — and their corporations — rely on to build things for them. These factories are currently shut down because workers have been quarantined. Shoppers aren’t shopping. Transporters aren’t transporting.
This also has the threat of overwhelming the healthcare system in China and creating issues beyond China now that second generation cases have been discovered in other countries. That means people are contracting the virus that weren’t in Wuhan.
Heightened insecurity is what the market dislikes the most. So it makes sense to look for stocks now that can see past current market issues and have their sights set on a longer term set of goals.
In my Portfolio Grader, the stock-picking system I use to find Growth Investor recommendations, these 7 large cap darlings to buy are all A-rated and can ease your mind in troubling times.
Large-Cap Stocks to Buy: Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) has made quite a comeback from lows a few years ago when it was dealing with supply chain and quality control issues. Combined with stubborn management that continued to whistle past the graveyard, these issues were very troubling.
But Chipotle leadership has finally pivoted and found a way back. Quality control issues have faded and its new menu items show that it’s trying to understand its customers’ desires even more than customizing every meal for them.
Its focus on freshness and healthy options was timely and it once again looks like a company that is regaining a leadership role in the fast casual sector.
CMG stock certainly reflects that. It’s up nearly 30% for us at Growth Investor just since April. It’s a bit expensive here, but it’s US-focused and US consumers are doing well. That deserves a premium when you’re a customer focused as Chipotle is at this point.
Heico Corp (HEI)
Heico Corp (NYSE:HEI) isn’t a household name. But it’s been doing the same thing (for the most part) since 1957.
And right now, it’s in one of the hottest industries around – defense and aerospace technologies.
While we hope that the world finally settles down and border conflicts and ambitious and/or spiteful leaders disappear, that isn’t the case. Trouble is just as iterative as peace, yet it is far more disruptive.
Russia is back on the move. China is expanding its power. Iran, India, Pakistan and North Korea are restive.
And now there’s space. A new Space Force has been established and the race for space dominance is on as well. Heico is one of the key players in helping everything from helicopters to spacecraft get there and back safely.
Heico stock is up 45% in the past year, but there’s still plenty of room for growth as the world reaches into the stars.
Leidos Holdings (LDOS)
Leidos Holdings (NYSE:LDOS) is another ‘insider’ company that started its journey as a contract research arm of the US government. It was formerly known as SAIC until 2013.
This firm has a broad base of research project with the government today. But its most important growth piece now is its work with the military and intelligence communities.
In mid-December, it purchased research firm Dynetics for $1.7 billion. This further builds Leidos’ focus on the aerospace sector and is a pretty easy assimilation since they both have similar skill sets. It consolidates their customer base under one roof without significant overlap.
Because of its 50-year relationship with the Pentagon and the wider intelligence community, LDOS is well positioned for the next phase of growth that is just beginning.
That’s why the stock is up 75% in the past 12 months and still trading at a price-to-earnings ratio of 22. I just recommended LDOS in Growth Investor and am looking for continued strength going forward.
Franco-Nevada Corp (FNV)
Franco-Nevada Corp (NYSE:FNV) is one of the more interesting ways to play gold.
As you have seen over the past year, gold can lie dormant for a while and then take off. But in the meantime, you may be sitting on an asset that doesn’t do anything for years.
And that’s especially true of the mining companies. Their stock prices are leveraged to the price of gold. That means when gold goes up, their share prices soar, and when it drops, they plummet.
It’s pretty volatile, especially since gold is typically a hedge position against the broader stock market.
FNV is unique because it doesn’t own gold or mining operations. It owns the properties that miners use and collects royalties on what they find and rents on the properties. It’s like a gold real estate investment trust (REIT).
That keeps the volatility lower than most stocks in the sector and provides some regular income as well. The stock is up 44% in the past year, so the dividend is running at 0.9%, but if you’re looking for a gold hedge, this is a pragmatic choice.
Koninklijke Philips (PHG)
Koninklijke Philips NV (NYSE:PHG) is a Dutch company that has been around since 1891. Think of it as the Netherlands version of what General Electric (NYSE: GE) used to be about 30 years ago.
It makes lightbulbs, appliances, healthcare equipment, consumer electronics and a host of other products. Do you use a Sonicare electric toothbrush? That’s a Philips brand.
And its brand is global. Philips has a decent piece of the US market, but its real presence is in Europe and into Asia, Africa and South America.
Its size and the fact that it makes products for the middle and lower end of the market, as well as products like lighting that everyone buys, make this a rock-solid firm in good or bad times. It’s the kind of business model that shows up well in my stock-picking system.
That’s how you end up a successful consumer-facing company after 129 years.
This isn’t a get-rich-quick stock; PHG is a slow-and-steady-wins-the-race stock. It’s up 20% in the past year and delivers a solid 1.7% dividend.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is the largest electric utility in the world by market capitalization. It’s also the world’s largest producer of wind and solar energy.
That’s not bad for a company that started in 1925 as Florida Power & Light. It continues to serve southern Florida and remains a leading energy utility in the state and beyond.
But its unregulated side is its turbocharger. Building out a portfolio of renewable energy projects, and acquiring others around the nation has turned this side of the business into a growth powerhouse.
At least for now, utilities and other industrial power consumers get carbon credits for using clean energy. By buying energy from NEE, they can save upgrading their plants and equipment or delay building new ones. As a key player in this energy strategy, NextEra is looking more like a green growth company than a utility.
NEE stock is up 48% in the past 12 months, yet its current PE is 34. And it still delivers a solid dividend of 1.9%.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) needs no introduction. It’s a monster. Its market cap is $1.3 trillion.
Office 365, its cloud-based product suite has 32.7 million individual users and its commercial base was up 27% in its most recent reported quarter, which ended December 31, and was reported Jan. 30 after the market close.
Its commercial cloud business on Azure was up 29% in the quarter. That puts annual revenue from Azure at around $50 billion. That would outpace even Amazon’s (NASDAQ:AMZN) AWS cloud business, which is currently the dominant player in the space. This race for the cloud is going to be crucial in coming years as 5G technologies will be very dependent on reliable and powerful cloud-based platforms.
The stock is up 65% in the past year and 3% after its earnings release yesterday. Yet its current PE is just 30, and it pays a respectable 1.2% dividend.
What I especially like about Microsoft is that it’s smart enough not to remain a legacy PC brand like Dell Computer (NYSE:DELL). It’s investing heavily in technology of the future, from the cloud to “the mother of all technologies”: artificial intelligence (A.I.)
The AI Master Key
If artificial intelligence sounds futuristic, even far-fetched — well, keep in mind, you’re already using it every day. If you’ve ever used Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Assistant or Apple’s (NASDAQ:AAPL) Siri … if you’ve had Netflix (NASDAQ:NFLX) recommend a movie or Zillow (NASDAQ:Z) recommend a house … even an email spam filter … then you’ve used artificial intelligence.
In this new world of AI everywhere, data becomes a hot commodity.
As scientists find even more applications for artificial intelligence — from hospitals to retail to self-driving cars — it’s incredible to imagine how much data will be involved.
To create AI programs in the first place, tech companies must collect vast amounts of data on human decisions. Data is what powers every AI system. As one AI researcher from the University of South Florida puts it, “data is the new oil.”
To cash in, you’ll want the company that makes the “brain” that all AI software needs to function, spot patterns and interpret data.
It’s known as the “Volta Chip” — and it’s what makes the AI revolution possible.
You don’t need to be an AI expert to take part. I’ll tell you everything you need to know, as well as my buy recommendation, in my special report for Growth Investor, The A.I. Master Key. The stock is still under my buy limit price — so you’ll want to sign up now. That way, you can get in while you can still do so cheaply.
Click here for a free briefing on this groundbreaking innovation.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.