Yahoo Finance 5 Attractive Large-Cap Stocks to Buy Despite Recession Fears
Wall Street has been suffering from volatility again since the beginning of May. In its recently concluded May FOMC meeting, the Fed raised the benchmark interest rate by 25 basis points to the range of 5-5.25%, marking the highest Fed Fund rate since August 2007.
Fed Chairman Jerome Powell indicated that the ongoing rate hike cycle is perhaps reaching its end, although it will depend on the outcome of economic data. However, Powell has categorically denied any rate cut this year as inflation seems to be declining at a slow rate.
As a result, the U.S. economy is suffering its biggest challenge in the regional banking segment. Three major regional banks have already collapsed and a large-section of economists and financial experts remain highly concerned about more casualties.
In first-quarter 2023, the U.S. GDP growth rate came in at a moderate 1.1% compared with the consensus estimate of 2% and the fourth-quarter 2022 growth rate of 2.6%. Moreover, the Conference Board’s Leading Economic Index, a gauge of future economic activity, dropped to 108.4 in March from February’s revised reading of 109.7, its 12th successive monthly drop and the lowest reading since November 2020.
Precipitous contraction in ISM manufacturing and services activities, a decline in orders of durable goods, a reduction in construction activities, and a freight recession are all signaling the possibility of a recession later this year. Fed Chair also acknowledged that the current banking turmoil in the United States has led to tighter credit conditions, and is likely to impact economic activities.
Consequently, several large-cap stocks are currently available at attractive valuations. Investment in these stocks with a favorable Zacks Rank should be fruitful to gain in the near term.
Our Top Picks
We have narrowed our search to five large-cap stocks currently trading at a deep discount to their 52-week highs. These stocks have strong potential for 2023 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Amazon.com Inc. AMZN is gaining on solid Prime momentum owing to ultrafast delivery services and a strong content portfolio. The strengthening relationship with third-party sellers is a positive. Additionally, the strong adoption rate of AWS is aiding AMZN’s cloud dominance. An expanding AWS services portfolio is continuously helping Amazon in gaining momentum among customers.
Robust Alexa skills and an expanding smart home products portfolio are positives. AMZN’s strong global presence and solid momentum among the small and medium businesses remain tailwinds. Considering the abovementioned facts, we expect 2023 revenue to be up 5% from 2022.
Amazon has expected revenue and an earnings growth rates of 8.9% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings improved 12.5% over the last 30 days. The stock price of AMZN is currently trading at a 29% discount from its 52-week high.
MongoDB Inc. MDB provides general purpose database platform worldwide. MDB offers MongoDB Enterprise Advanced, a commercial database server for enterprise customers to run in the cloud, on-premise, or hybrid environment, MongoDB Atlas, a hosted multi-cloud database-as-a-service solution, and Community Server, a free-to-download version of its database, which includes the functionality that developers need to get started with MongoDB.
MongoDB also provides professional services comprising consulting and training. MDB serves financial services, government, healthcare, media and entertainment, technology, retail and telecommunications industries.
MongoDB has expected revenue and earnings growth rates of 16.6% and 27.2%, respectively, for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 53.3% over the last 60 days. The stock price of MDB is currently trading at a 39.3% discount from its 52-week high.
Okta Inc. OKTA provides identity management platforms for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally.
OKTA’s products consist of Okta Information Technology Products and Okta for Developers. Okta IT Products include Single Sign-On, Mobility Management, Adaptive Multi-Factor Authentication, Lifecycle Management and Universal Directory. Okta for Developers include Complete Authentication, User Management, Application Programming Interface Access Management and Developer Tools.
OKTA has expected revenue and earnings growth rates of 16.6% and more than 100%, respectively, for the current year (ending January 2024). The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the last 60 days. The stock price of OKTA is currently trading at a 39% discount from its 52-week high.
Zscaler Inc. ZS is benefiting from the rising demand for cyber-security solutions owing to the slew of data breaches. The increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver of ZS.
Zscaler’s portfolio boosts its competitive edge and helps add users. Moreover, a strong presence across verticals, such as banking, insurance, healthcare, the public sector, pharmaceuticals, telecommunications services, and education, is safeguarding Zscaler from the pandemic’s negative impact. Also, recent acquisitions, like Smokescreen and Trustdome, are expected to enhance ZS’ portfolio.
Zscaler has expected revenue and earnings growth rates of 43.2% and more than 100%, respectively, for the current year (ending July 2023). The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the last 60 days. The stock price of ZS is currently trading at a 57.6% discount from its 52-week high.
Paycom Software Inc. PAYC is a provider of cloud-based human capital management software as a service solution for integrated software for both employee records and talent management processes.
PAYC’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers. Further, solutions like Ask Here and Manager on-the-Go, both focusing on employee usage and efficiency, are tailwinds.
Paycom Software has expected revenue and earnings growth rates of 24.2% and 21.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days. The stock price of PAYC is currently trading at a 37.5% discount from its 52-week high.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Paycom Software, Inc. (PAYC) : Free Stock Analysis Report
Okta, Inc. (OKTA) : Free Stock Analysis Report
MongoDB, Inc. (MDB) : Free Stock Analysis Report
Zscaler, Inc. (ZS) : Free Stock Analysis Report
