Stocks to buy

During market volatility, the best thing you can do is look toward growth-oriented large-cap stocks. Now, many will ask why it’s important to buy large-cap stocks during a time when Tesla (NASDAQ:TSLA) is up 239.3% in the last year, and AMC (NYSE:AMC) is up 314.5% in the last month alone.

I will counter with just one word, stability. Large-cap stocks are more stable and mature investments than volatile growth stocks, which can generate big returns or wipe out your retirement savings. As they are so large and well-established, large-cap corporations are less likely to come across a business or economic circumstance rendering them bankrupt or unable to produce revenue.

Large-cap stocks typically have lower volatility, greater analyst coverage and a stable income stream.

This list of large-cap stocks to buy includes large companies exhibiting strong revenue and earnings growth – and are still reasonably priced. The stock prices of these companies are also performing reasonably well versus each industry and the S&P 500.

So, without further ado, here are seven large companies you need to keep an eye on:

  • Apollo Global Management (NYSE:APO)
  • Logitech International S.A. (NASDAQ:LOGI)
  • Dick’s Sporting Goods (NYSE:DKS)
  • PulteGroup (NYSE:PHM)
  • Dollar General (NYSE:DG)
  • Yanzhou Coal Mining (OTCMKTS:YZCAY)
  • Sonic Healthcare (OTCMKTS:SKHHY)

Large-Cap Stocks to Buy: Apollo Global Management (APO)

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Apollo Global Management is one of the largest private equity companies in the world. The global alternative investment management firm had assets under management of roughly $461 billion as of March 31.

Considering its size and sustained economic performance, I find it surprising that more analysts don’t recommend this company. In the last five years, EPS increased by 87.8%, and the top line has jumped 48%. Apollo’s return on equity on a trailing 12 months (TTM) basis is an outstanding 91.7%. In the first quarter, gross inflows were $13.4 billion and $128.8 billion over the 12 months ended March 31. Dry powder was $49.7 billion as of quarter-end. Of that amount, $23.6 billion comes with future management fee potential.

It would be unfair to move forward without touching upon Apollo Global’s merger with retirement services company Athene (NYSE:ATH). The all-stock merger will generate accretion of $1.38 per share or 68% on 2020 combined after-tax earnings. More importantly, it will help increase permanent capital due to the addition of fixed annuity insurance assets.

Despite these positive catalysts and a dividend yield of 3.4%, APO stock still trades at 18 times forward price-to-earnings. That makes it a steal in my eyes.

Logitech International S.A. (LOGI)

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Computer aficionados will recognize Logitech International pretty quickly. However, the Swiss manufacturer of computer peripherals and software often does not make the list of large-cap stocks to buy.

However, InvestorPlace‘s Louis Navellier recommended the Swiss maker of home office equipment and other tech gadgets to his Platinum Growth Club subscribers back in December 2020. If you took the advice and invested in the stock at that time, you are sitting on a gain of 29.3%.

Still, this is a company that sells charging stands, mounts, cases, computer speakers, cameras, keyboards and mice. So do not expect revenues to slow down in the forthcoming quarters with this suite of products.

Over the last five years, the bottom line and the top line have jumped by 48.2% and 21.1%, respectively. During this same period, LOGI has outperformed the S&P 500 by 605.0% and its sector by 446.6%.

Logitech has posted a return on invested capital of 17% or more in each of the past eight fiscal years. On a trailing 12 months basis, the company has managed a return of 49.6%. Meanwhile, the industry is at 23.7% and the S&P 500 at 15.9%.

At 26.5 times forward P/E, there may be some who will argue the stock is overvalued. But after the numbers are just laid out, it becomes clear that Logitech is a clear winner in its peer group. So even if you have to pay a little extra for this one, it’s worth the price of admission.

Large-Cap Stocks to Buy: Dick’s Sporting Goods (DKS)

Source: Jonathan Weiss / Shutterstock.com

The next pick is a bit controversial. Retail is not seen favorably among investors these days. Yes, there have been some casualties due to the pandemic. However, not everything is doom and gloom.

Dick’s Sporting Goods, for example, was able to use the pandemic as an opportunity to increase revenues and capitalize on the public’s demand for home exercise and outdoor fitness equipment.

If you are cooped up at home, you will want to exercise and let off steam. During a pandemic, these actions are crucial for maintaining physical and mental well-being.

Due to this heightened demand, the company’s same-store sales grew 10% in 2020. In addition, Dick’s investment in e-commerce before the pandemic paid dividends, leading to online sales doubling last year.

Not one for resting on laurels, the sporting goods retailer has introduced an exclusive athleisure line for men and opened an experiential retail store this spring. The store, called House of Sport, has an indoor rock climbing wall, golf driving bays and a putting green.

CEO Lauren Hobart is hoping the company’s growth momentum will be secular. In an interview at CNBC’s Evolve Global Summit, the executive said, “People will certainly go back and take vacations. There may be more discretionary income in the market, but I think there’s been a permanent shift toward outdoor living and active living and also athletic apparel.”

Even if you put the recent performance to the side, Dick’s Sporting Goods is a very consistent performer. In the last five years, the bottom line and the top line have increased by 31.1% and 8.7%, and the company has hiked its payout for six years straight.

PulteGroup (PHM)

Source: rafapress / Shutterstock.com

One area of the economy back in full swing is housing. With record-low mortgage rates driving a V-shaped recovery, home sales are increasing at a healthy rate. In addition, millennials are the largest generation in American history and they finally have the cash to purchase their first homes.

Last year saw the national savings rate skyrocket to its highest level in decades. On top of all that, interest rates are at historic lows, creating the perfect situation for millennials to escape their current apartment or basement into new lodgings.

PulteGroup, therefore, becomes an ideal stock to take advantage of this situation. It is the third-largest home construction company in the United States based on the number of homes closed. PulteGroup operates in 40 markets across 23 states and mainly builds single-family detached homes.

Home sale revenue for the first quarter totaled $2.6 billion, an increase of 17% over the prior-year period. This came on the back of a 12% increase in the number of homes closed.

“The year has gotten off to an outstanding start with strong demand across all of our markets and buyer groups which helped drive a 31% increase in net new orders, including a 49% gain in active-adult sales,” Ryan Marshall, PulteGroup president, and CEO, said. “In the first quarter, we continued to capitalize on this favorable demand environment as we expanded our adjusted operating margin by 280 basis points and generated a 60% increase in adjusted earnings per share.”

One can understand that PulteGroup is somewhat of a recovery play. President Joe Biden is aggressively investing in roads, public transit, ports, airports and electric vehicle development. All of this stimulus money will mean more purchasing power, which will, in turn, keep demand strong for housing.

Large-Cap Stocks to Buy: Dollar General (DG)

Source: Jonathan Weiss / Shutterstock.com

I can’t think of enough good things to say about Dollar General. The discount retailer sells essential merchandise, including consumables, seasonal, home products and apparel.

Due to the nature of its operating model and products, it is an all-weather performer. Its strong fiscal first-quarter reaffirms this narrative.

Dollar General earned $677.7 million, or $2.82 a share, up from $2.56 a share in the year-ago period and beating analyst estimates of $2.22 per share. Revenue fell 0.6% to $8.4 billion but still managed to beat consensus estimates of $8.27 billion. The company also raised its outlook for the full year. Dollar General expects to earn between $9.50 and $10.20 in the fiscal year, after previously forecasting EPS of $8.80 to $9.50.

There is often a debate about which is the better company, Dollar General, or fellow retailer Dollar Tree (NASDAQ:DLTR). Despite sharing similar names and operating models, I believe Dollar General is the better investment.

Dollar Tree earned $1.60 a share on revenue of $6.48 billion in its fiscal first quarter, beating respective consensus estimates of $1.42 and $6.28 billion. Same-store sales of 0.8% marginally beat analysts’ expectations, but its full-year outlook, for earnings of $5.80 to $6.05 a share, was below the consensus of $6.23. Overall, you can see that Dollar General is definitely the better large-cap stock in the space.

Yanzhou Coal Mining (YZCAY)

Source: Shutterstock

Chinese stocks, muddled by slowing growth, the US-China trade war and policy tightening risks, are often overlooked by overseas investors. However, there are several diamonds on the Chinese exchanges that offer growth and stability.

Yanzhou Coal Mining, a state-owned coal mining company, is one of the best performers you will come across in the energy sector. In the last five years, sales and EPS have increased by 22.3% and 52.2% through a mix of mining, washing, preparation and railway transportation of coal.

As one of China’s largest listed miners by production, it is riding the tailwind of higher thermal coal prices. The stock-price appreciation and a sharp increase in commodity prices highlight how important fossil fuel remains even as China begins a long-term shift toward carbon neutrality.

The cherry on the cake is that the company returned the majority of 2020 profits to shareholders in dividends, 1 yuan per share on per-share earnings of 1.29 yuan.

Yanzhou’s state backing is the only reason I can think of that could potentially turn off investors. But most of China’s biggest companies are state-owned enterprises. That comes with the territory. So, if you are willing to look past this, YZCAY is a solid investment.

Large-Cap Stocks to Buy: Sonic Healthcare (SKHHY)

Source: Shutterstock

Sonic Healthcare is one of Australia’s largest diagnostic companies, having its roots in the pathology practice of Douglass Laboratories. The Sydney-based medical diagnostics company is the third-largest global pathology services provider. It owns the biggest privately held pathology lab in the U.S., Clinical Pathology Laboratories, and one of Europe’s largest, Bioscientia Healthcare.

While the company benefitted immensely from high​-volume Covid-19 testing in the U.S., Europe and Australia, the rest of the business is positively performing. As a result, the company is well-positioned to benefit from pent-up demand for healthcare services.

More recently, the company agreed to purchase Canberra Imaging Group, a leading radiology practice in Canberra, with branches in Goulburn and Queanbeyan in New South Wales. Sonic says the acquisition, scheduled to settle in the first quarter of the financial year 2022, is estimated to boost revenue more than 10%.

Due to its clean, under-geared balance sheet, Sonic Healthcare is pursuing several mergers and acquisitions, contracts, and joint ventures in the U.S., UK, Australia and Canada. All of these factors combine to make Sonic one of the best Australian companies to buy.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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