If you’re interested in some great mega-cap stocks to build your portfolio with, here are details on three of them.
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April 17, 2021 5 min read
This story originally appeared on MarketBeat
The concept of building your portfolio around multiple core positions that offer positive and consistent returns is a great way to make long-term investments. Highlighting buying large positions in companies with stable earnings and lower volatility can help you feel more comfortable taking risks with the rest of your portfolio and not have to worry as much about massive drawdowns on your account.
Mega-cap stocks can be a great option for core positions, as they are typically companies with a long track record that are likely to remain leaders in their respective industries for years to come. After all, a company doesn’t just grow to $ 200 billion or more in market cap overnight. The fact that these are the largest and most important companies in the world will help you gain confidence in your portfolio and stay on course with your top positions no matter what the overall market is doing. If you’re interested in some great mega-cap stocks to build your portfolio with, here are details on three of them.
Microsoft (NASDAQ: MSFT)
If you’re looking for a “big tech” stock to build your portfolio with, you can’t think of a better choice than Microsoft. This company is about to join the prestigious $ 2 trillion market cap club and has many different trends currently working in its favor. This is a good reason to start thinking about adding stocks now. While most people are familiar with Microsoft’s enterprise software and personal computing products, investors should be most excited about the company’s burgeoning cloud solutions. With so many companies looking to upgrade their digital infrastructure and improve their operational efficiencies, Microsoft’s commercial cloud segment will be a huge growth driver for the company over the next several years.
Microsoft Azure, the cloud computing platform from Microsoft that supports companies in their digital transformations, is arguably the most exciting reason to currently occupy a core position in the company. Microsoft has doubled its market share in recent years to 17% of the public cloud infrastructure business, and Azure revenue increased 50% year over year in the second quarter. The company has also made smart acquisitions in the past, including the recently announced acquisition of Nuance Communications, and has a strong pipeline of innovative new products, including augmented / virtual reality technology, with a ton of upside potential going forward.
The Home Depot (NYSE: HD)
Next up, we have The Home Depot, the world’s largest hardware store and a very strong stock to build your portfolio with. As a market leader serving homeowners and professional customers, you can expect The Home Depot to consistently generate high profits and provide good long-term growth. The company has been a major beneficiary of homeowners looking to remodel during the pandemic, and had sales of $ 132.1 billion in fiscal 2020, up 19.9% year over year. Residential remodeling activity is expected to hit a decade high in late 2021, meaning The Home Depot is ready for another big year.
There’s also a lot to like about this company’s strong corporate strategy, which includes international expansion into countries like Mexico. Home Depot also recently acquired HD Supply Holdings Inc, making it the leading provider of maintenance, repair and operational products in the multi-family and hospitality end markets. With a proven brand, countless market trends working in their favor, and the fact that the stock is making an all-time high at this point, Home Depot is a great choice for investors looking to build a strong blue-chip stock.
Bank of America (NYSE: BAC)
Another solid mega-cap stock to consider as a core portfolio is Bank of America, one of the largest financial institutions in the world and a company that plays a vital role in the US economy. This company offers consumers a wide variety of banking, investment, wealth management, and other financial and risk management products and services. Thanks to the company’s industry-leading brand and potential for dividend increases and share buybacks in the future, this is a great option for any portfolio. It’s also worth noting that the company announced a $ 25 billion share buyback plan last week.
Bank of America is also a good mega-cap stock at this point as the financial sector is largely recovering from the effects of the pandemic. Remember, a strong economy, rising inflation, and rising interest rates are factors that can benefit a company like Bank of America. The stock is up over 30% so far in 2021, but that shouldn’t deter investors from adding stocks to a likely-yet-undervalued mega-cap stock.
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