Large cap stocks (over $10B in market cap) are often a popular way to fill out a portfolio. They tend to be more mature companies and are less volatile during rough markets as investors fly to quality and become more risk-averse. Here are our top 3 large cap stock picks.
Tesla, the EV leader
Tesla (NASDAQ:TSLA) ranks as the 8th largest company in the world by market cap, sitting at around $690B. News came out today that US regulators are launching an investigation into the autopilot system. The regulators said it had identified 11 crashes where Tesla vehicles have “encountered first responder scenes and subsequently struck one or more vehicles.” This news has caused the share price to fall over 4% today.
So why do I believe it is still a good investment? The electric vehicle (EV) market is a rapidly expanding space and I don’t think it is near its peak yet. Tesla has been a front runner in this sector for many years now, and the market valuation shows this. More and more companies are expanding to enter this space, but I believe Tesla will be on top for many years to come.
This recent news could lead to cheaper prices. A drop to $650-$660 would take the weekly chart (below) to this strong trend line and provide a nice entry for a position. I believe $1,000 will be reached by the end of the year.
Apple, the largest of large cap stocks
Apple ranks as the largest company by market cap, valued at $2.46T. Only two companies have a market cap of over 2 trillion, Apple and Microsoft. Today, Apple crossed the $150 mark in share price, something that investors have been keeping an eye on. Significant numbers such as $100 and $150 can act as resistance for a stock to break above. Apple shares tried to break above $150 three days in a row in mid July and then again at the end of the same month.
From here, I believe Apple can continue make the next leg up. Some Fibonacci levels to note as targets are $162.53 and $175.23.
Another positive for this stock is the dividend payment. This provides passive income alongside your investment that you can either re-invest into the stock to compound your portfolio, or take away to enjoy outside of the market. You can read more about why we believe dividend stocks are a great option here.
Advanced Micro Devices, a great growth stock
Advanced Micro Devices (NASDAQ:AMD) has a market cap of $130B. The company is a force in the semiconductor industry which has thrived in recent months, and the sector looks set to maintain this through 2022, showing faster growth than the broader market. AMD has seen revenue of $7.3B in the first six months of 2021, up 96% compared to the same periods of 2020. Net income quadrupled to nearly $1.3B.
Not only is the sector set to continue its growth, the technicals of the stock are intriguing. The shares have been in consolidation since July of 2020, fluctuating in-between $74 and $100. At the end of July 2021, the price broke above $100 (a psychological number mentioned earlier), and the stock saw huge volume pile in. 500 million shares were traded in the week that it broke through $100, and nearly 780 million shares traded the week after, taking the price up to a high of $122.49.
‘The bigger the consolidation, the bigger the breakout’. The consolidation has happened (for 12 months) and the breakout is here. I think the stock should hold above $104 before making the next leg up. I can see $150 being reached in 2022 if the semiconductor industry continues to show impressive growth.