5 Megacap stocks with a rise of 19% to 32%, according to Wall Street
Last week the iconic Dow Jones Industrial Average and widely followed S&P 500 both reached new, unprecedented heights. Considering how the US stocks and economy were doing less than 13 months ago at the height of the coronavirus pandemic, this is a pretty impressive achievement.
But if you were to ask the professionals on Wall Street, they would suggest that there are even more benefits to come. And it’s worth noting that this advantage doesn’t just come from small- and mid-cap stocks. According to Wall Street, the following five mega-cap stocks – that is, publicly traded companies with a market cap of at least $ 200 billion – offer a rise over the next 12 months ranging from 19% to 32 %.
Amazon: implied increase of 19%
Has anyone really surprised this e-commerce giant? Amazon (NASDAQ: AMZN) is on this list? It may be the third largest public company in the United States by market capitalization, but I expect it to outperform Microsoft and Apple be the first to reach a valuation of $ 3 trillion. Over the next 12 months, Wall Street estimates that it offers a 19% rise, which would put its market cap around $ 2 trillion.
Most people are probably familiar with Amazon for its dominant online market. In March 2020, an eMarketer report estimated Amazon 2021’s share of U.S. e-commerce at 39.7%.
In other words, Amazon is expected to control around $ 0.40 out of every dollar spent online in the United States this year. That’s about 33 percentage points higher than the next closest competitor. Amazon has been able to pivot this online dominance by signing up over 150 million people worldwide to a Prime membership.
But make no mistake, Amazon’s growth story is based primarily on cloud infrastructure service provider Amazon Web Services (AWS). Despite the worst economic downturn in decades last year, AWS increased sales by 30%.
Additionally, it accounted for 59% of Amazon’s $ 22.9 billion operating profit in 2020, while it only accounted for about one-eighth of total sales. As AWS becomes a bigger part of Amazon’s total sales, the company’s cash flow will skyrocket.
Novartis: implied increase of 20%
Wall Street is also quite bullish on pharmaceutical stocks Novartis (NYSE: NVS). After the stock closed on Monday, April 12, at $ 87.34, analysts are forecasting a one-year target of nearly $ 105. This suggests that Novartis could rise 20% and trade at a new all-time high in the process.
Although the pandemic negatively impacted a number of Novartis operating segments, revenue from its continuing operations increased another 3% last year, largely due to the growth of its pharmaceuticals. success and its innovative medicines segment. The best-selling anti-inflammatory drug Cosentyx generated 13% sales growth to around $ 4 billion, while the heart failure blockbuster Entresto generated 44% year-on-year revenue growth at $ 2.5 billion. Meanwhile, sales of the Zolgensma spinal muscular atrophy treatment increased 151% to $ 920 million.
Beyond brand growth and the company’s innovative drugs, Wall Street is likely also excited about Novartis’ execution and pipeline. There are currently 167 ongoing clinical trials or registrations, of which 73 focus on oncology. Of these more than 13 dozen studies, 44 are at an advanced stage and five were in the process of being registered, as of January 2021.
The company has had five or six major drugs approved each year for the past three years, and expects more than a dozen readings of mid-stage and late-stage clinical trial data this year. To use a baseball analogy, with so many pitches being pitched, Novartis is required to hit a few home runs.
Salesforce.com: implied increase of 20%
The cloud-based customer relationship management (CRM) software provider is another megacap stock that offers serious benefits for next year in the eyes of Wall Street investment banks. salesforce.com (NYSE: CRM). With a one-year consensus price target of nearly $ 275, the sales force has implied a 20% hike.
The beauty of CRM software is that it offers double-digit growth potential throughout the decade. It is useful for all businesses that have contact with consumers and can help log customer information, manage service issues, manage marketing campaigns, and even recommend new products or services to existing customers.
What makes Salesforce so special is its dominance of the global CRM solutions market. In the first half of 2020, the sales force controlled just 20% of global CRM revenue, according to IDC. It is more than n ° 2 to n ° 5 in the world CRM share, combined!
In addition, Salesforce is expected to benefit from its impending acquisition of the corporate communications platform. Slack Technologies. The idea here is that the sales force will be able to use Slack as a starting point to sell their CRM solutions to a plethora of small and medium businesses. With Slack, the sales force is expected to be able to achieve $ 50 billion in revenue in five years, which would be up from the $ 21.2 billion in full-year sales reported in the last five years. fiscal year 2021.
Nike: implied increase of 20%
A megacap stock that Wall Street considers a shoo-in is a shoe and accessories company Nike (NYSE: NKE). If analysts’ prognosis turns out to be correct, Nike will climb to around $ 165 a share in 12 months, up 20%.
Why Nike? Much of the company’s success is linked to its incredible branding, its ability to adapt to varied economic environments, and its premier brand ambassadors who cater to multiple generations of shoe buyers and accessories. In particular, Nike has put more emphasis on digital sales during the pandemic.
In its fiscal third quarter ended February 28, 2021, digital sales increased 54% at constant exchange rates. Expanding its omnichannel presence and improving consumer convenience could allow Nike to dramatically improve in a post-pandemic world.
Nike has also done well in turning its attention to China. Despite a 10% drop in sales in North America due to supply chain challenges, the company’s total revenue grew 3% in the third quarter of 2021. The reason? Greater China sales rose 51% (including currency fluctuations) to $ 2.28 billion. As China grows for Nike, it could become the company’s second most important region – behind North America alone – within the next two years.
Alibaba: implied increase of 32%
But the crème de la crème of the upside opportunity among megacap stocks, Wall Street says, lies in China’s ecommerce hub Ali Baba (NYSE: BABA). If Wall Street’s predictions come true, shares of Alibaba could rise 32% over the next year.
Unlike other names on this list, Alibaba’s advantage appears to depend on whether or not it can overcome a number of political uncertainties and the coronavirus pandemic. Remember, the pandemic hit China hard long before it hit the rest of the world.
However, there is good news on this front. Among the most significant issues facing Alibaba was an antitrust investigation launched by the Chinese government into the company’s e-commerce practices. Last week he was fined $ 2.8 billion.
As my foolish colleague Joe Tenebruso noted, it’s actually good new, since it represents only 40% of the maximum authorized fine, based on the company’s turnover. China’s State Administration for Market Regulation also does not require the company to divestment as part of its decision. In other words, it’s coming back to business as usual, with improved oversight and better internal controls.
Similar to Amazon, Alibaba’s future may well lie in its innovative projects that lie outside of e-commerce. Despite the control of 56% of the Chinese e-commerce market, by eMarketer, it is Alibaba Cloud that could one day be the superstar of this company. Fiscal third quarter sales increased 50% for Cloud to nearly $ 2.5 billion, as the segment achieved positive adjusted earnings before interest, taxes, and depreciation in the quarter.
With one of the fastest growing rates among megacap stocks and a significant weight now lifted, Alibaba shares hitting $ 318 per year from now on is not out of the question.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.