Multi-decade-high inflation, supply chain issues, surging COVID-19 cases, and increasing jobless claims have been causing immense volatility in the stock markets lately. Major benchmark indexes have retreated significantly this month…
raising concerns over the potential length and depth of the correction.
In this environment, investing in fundamentally sound mega-cap stocks is considered a safe strategy because these stocks usually withstand market fluctuations better than shares of smaller companies. Furthermore, these companies’ dominant market positions accord their financials some resilience even in adverse economic conditions.
Despite the possibility of a continuing market weakness, Wall Street analysts expect mega-cap stocks Amazon.com, Inc. (AMZN – Get Rating), NVIDIA Corporation (NVDA – Get Rating), The Walt Disney Company (DIS – Get Rating), salesforce.com, inc. (CRM – Get Rating), and PayPal Holdings, Inc. (PYPL – Get Rating) to deliver a than 40% gain in the coming months. Therefore, we think it could be worth adding these stocks to one’s watchlist.
Amazon.com, Inc. (AMZN – Get Rating)
With a market capitalization of $1.47 trillion, AMZN in North Seattle, Wash., is a multinational technology company that is an online retailer of consumer products and subscriptions, operator of Amazon Web Services (AWS), one of the biggest cloud platforms in the digital computing space, and offers compute, storage, database, analytics, machine learning, fulfillment, advertising, publishing, and digital content subscriptions. It also offers personalized shopping services, web-based credit card payment, and direct shipping to customers.
On Jan. 10, 2022, AMZN’s Amazon Web Services, Inc. (AWS) announced the general availability of Amazon Elastic Compute Cloud (Amazon EC2) Hpc6a instances, a new instance type that is purpose-built for tightly coupled high-performance computing (HPC) workloads. Powered by Advanced Micro Devices, Inc.’s (AMD) 3rd Gen AMD EPYC processors, these Hpc6a instances deliver up to 65% better price-performance than similar compute-optimized Amazon EC2 instances. AMZN expects to witness high demand for these Hpc6a instances from organizations that rely on HPC.
AMZN’s total net sales for its fiscal 2021 third quarter, ended Sept.30, 2021, increased 15.3% year-over-year to $110.81 billion. As of Sept. 30, 2021, the company had $29.94 billion in cash and cash equivalents.
Analysts expect the company’s revenue to increase 21.8% year-over-year to $470.32 billion in its fiscal 2021, ended Dec. 31, 2021. It surpassed the consensus EPS estimates in three of the trailing four quarters. AMZN’s EPS is expected to grow at a 36% rate per annum over the next five years.
The stock has declined 16.3% in price over the past month and closed yesterday’s trading session at $2,809.88. All 30 Wall Street analysts rating the stock have rated it a Buy. The stock’s $4,150.83 average price target indicates 43.6% upside potential.
NVIDIA Corporation (NVDA – Get Rating)
NVDA designs and manufactures computer graphics processors, chipsets, and related multimedia software used in the gaming, professional visualization, data center, and automotive markets. The Santa Clara, Calif–based company’s products are sold to OEMs, ODMs, system builders, add-in board manufacturers, retailers/distributors, Internet and cloud service providers, mapping companies, and other ecosystem participants. It has a market capitalization of $582.43 billion.
On Jan. 24, 2022, NVDA announced that technology conglomerate Meta Platforms, Inc. (FB) selected NVDA’s NVIDIA DGX A100 systems to be installed in FB’s AI supercomputer–The AI Research SuperCluster (RSC)–to build better AI models and progress toward developing metaverse. The new AI supercomputer uses 760 NVIDIA DGX A100 systems as its compute nodes, and 6,080 NVIDIA A100 GPUs are linked on an NVIDIA Quantum 200Gb/s InfiniBand network to deliver 1,895 petaflops of TF32 performance. FB plans to expand to 16,000 GPUs to deliver a whopping five exaflops of mixed precision AI performance. NVDA is looking forward to a long-term partnership with FB.
NVDA’s total revenue for its fiscal 2022 third quarter, ended Oct. 31, 2021, increased 50.3% year-over-year to $7.10 billion. The company’s non-GAAP gross profit came in at $4.76 billion, representing a 53.8% year-over-year improvement. Its non-GAAP income from operations came in at $3.39 billion for the quarter, indicating a 69.9% rise from the prior-year period. NVDA’s non-GAAP net income was $2.97 billion, up 62.1% from the year-ago period. And its non-GAAP EPS increased 12.5% year-over-year to $1.17. The company had $1.29 billion in cash and cash equivalents as of Oct. 31, 2021.
The $4.34 consensus EPS estimate for its fiscal year 2022 ending Jan. 31, 2022, represents a 73.6% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. Analysts expect NVDA’s revenue to rise 60% year-over-year to $26.68 billion. And its EPS is expected to grow at a 39.4% per annum rate over the next five years.
NVDA’s shares have declined 21.2% in price over the past month and ended yesterday’s trading session at $233.72. Of 25 Wall Street analysts that have rated the stock, 23 have rated it a Buy, while two rated it Hold. Analysts expect the stock’s price to hit $359.17 in the near term, representing 53.7% upside potential.
The Walt Disney Company (DIS – Get Rating)
As one of the top entertainment companies worldwide, DIS in Burbank, Calif., operates through two business segments—Disney Media and Entertainment Distribution; and Disney Parks, Experiences, and Products. The company engages in film and episodic production and distribution activities, and operates television broadcast networks, studios that produce motion pictures, and direct-to-consumer streaming services. It sells branded merchandise through retail, online, and wholesale businesses and develops and publishes books, comics, and magazines. It has a market capitalization of…
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