Thursday, September 27, 2012

Large Cap Power Rankings

I heard Ken Fisher yesterday on CNBC Fast Money.  The point he drove home the whole time he was on was that the bull market is half over, and historically, in the second half of bull markets, large cap stocks outperform.  If you choose a basket of the 30 largest stocks, you will outperform the market.

Now, most investors can't afford to buy 30 stocks. You could probably find an ETF that did this, but most people are going to buy at most three stocks and hope.  Even though Fisher is not a proponent of this at this time.

That said, below is a list of the US stocks with the largest market cap and a few comments.

1. Apple (AAPL) of course.  Huge, growing very fast and the stock maintaining a low Price/Earnings ratio.  Just dropped a quick five percent in price.  What's not to like?

2. Exxon (XOM)  - just a cash machine.  The price of oil goes up and down, but XOM continues to make money.   Up 25% on the year, with a good dividend.

3. Microsoft (MSFT) - a boring stock that is up only 17% in a really good year.  Solid, though, and it's not likely you are going to lose money on it. Decent dividend just raised.

4. WalMart (WMT) - hated by critics, loved by consumers, ignored by investors.  Just keeps selling stuff and making money.  It has a 15 P/E that it may have to grow into.

5. General Electric (GE) is up 40% this year.  They do everything, including make money. Nice dividend but pretty high P/E.  Like WalMart, it make take some time for this to start going up.

6. IBM is only up 14% this year.  It continues to generate big bucks from its services business.  You really can't go wrong with it.  It's not a high flyer, but it won't crash either.

I would rank them 1, 6, 2, 3, 4, 5 as of now.   But, they didn't get to be this big by being bad companies, so they are still all buys.

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