3 Popular Mega-Cap Stocks Wall Street Predicts Will Rally by More Than 30% Given the current, uncertain state of the market, it could be safest to invest in mega-cap stocks for stable returns. And Wall Street analysts expect quality mega-cap stocks Visa (V),...
By Riddhima Chakraborty •
This story originally appeared on StockNews
Given the current, uncertain state of the market, it could be safest to invest in mega-cap stocks for stable returns. And Wall Street analysts expect quality mega-cap stocks Visa (V), Alibaba (BABA), and PayPal (PYPL) to deliver solid returns in the coming months. So, let's discuss these names.
Mega-cap stocks are considered the safest bets amid market volatility because the size and strength of these companies help them to endure market downturns better than their smaller-cap brethren. Due to their traditional, low-risk nature, mega-cap stocks are trusted by most investors. Indeed, investors' interest in mega-cap stocks is evidenced by Vanguard Mega Cap Index Fund ETF's (MGC) 6.4% returns over the past month and 23% gain year-to-date.
Even though the third-quarter earnings season has been impressive so far, and the stock market has moved higher in response, concerns over high inflation, supply chain disruptions, and the Fed's monetary policy tightening are expected to keep the market volatile in the near term. As investors brace for the Federal Reserve's tapering decision today, stock futures trading was mixed this morning.
Wall Street analysts expect popular mega-cap stocks Visa Inc. (V), Alibaba Group Holding Limited (BABA), and PayPal Holdings, Inc. (PYPL) to rally by more than 30% in price in the near term. So, we think it could be worth adding these stocks to one's watchlist.
Visa Inc. (V)
V is a Foster City, Calif.-based payments technology company that operates worldwide. The company facilitates digital payments among consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It has a market capitalization of $456.53 billion.
On September 20, 2021, V announced the addition of Shipt, Skillshare, and Sofar Soundsas exclusive benefits for Visa's U.S. Consumer Credit cardholders. Brian Cole, Head of Product, North America, Visa, stated, "These new benefit providers enhance our refreshed credit benefits portfolio to deliver special access for Visa consumer credit cardholders."
V's net revenues increased 28.6% year-over-year to $6.56 billion in the fourth quarter, ended September 30, 2021. While its net income increased 67.7% year-over-year to $3.58 billion, its operating income came in at $4.32 billion, up 37.3% year-over-year.
Analysts expect V's revenue and EPS to grow at 17% and 19.3% rates, respectively, to $28.21 billion and $7.05 for its fiscal year 2022. It surpassed the Street's EPS estimates in each of the trailing four quarters.
Over the past nine months, the stock has gained 3.2% in price to close yesterday's trading session at $209.14. Furthermore, Wall Street analysts expect the stock to hit $274.85 in the near term, which indicates a potential 31.4% upside.
Alibaba Group Holding Limited (BABA)
Based in Hangzhou, the People's Republic of China, BABA provides technology infrastructure and marketing reach to merchants, brands, retailers, and other businesses. It operates through four segments: Core Commerce; Cloud Computing; Digital Media & Entertainment; Innovation Initiatives and Others. It has a market capitalization of $450.31 billion.
On October 20, 2021, BABA announced its strategy for launching its new data centers and innovating products for a Hybrid Future. Selina Yuan, General Manager of International Business, Alibaba Cloud Intelligence, said, "With our business insight serving global customers in multiple key industries from retail to finance, logistics and manufacturing, we believe we can support local customers in South Korea and Thailand to meet their digitalization needs from both a technology and services perspective."
For the quarter ended June 30, 2021, BABA's revenue increased 33.8% year-over-year to $31.86 billion. The company's non-GAAP net income increased 10% from the same period last year to $6.73 billion. Its non-GAAP EPS came in at $0.32, up 12.4% year-over-year.
BABA's revenue is expected to be $141.32 billion in its fiscal year 2022, representing a 27.6% year-over-year rise. The company's EPS is expected to increase 15.7% year-over-year to $10.76 in the next year. It surpassed the Street's EPS estimates in three of the trailing four quarters.
Over the past month, the stock has gained 13% in price to close yesterday's trading session at $162.90. And Wall Street analysts expect the stock to hit $244.22 in price in the near term, which indicates a potential 49.9% upside.
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PayPal Holdings, Inc. (PYPL)
PYPL operates as a technology platform and digital payments company enabling digital and mobile payments on behalf of consumers worldwide. Its popular payment solutions are PayPal, PayPal Credit, Braintree, Venmo, and others. It has a market capitalization of $269.62 billion. PYPL is based in San Jose, Calif.
On October 27, 2021, PYPLlaunched its Zettle Terminal, anew, all-in-one point of sale solution that offers increased mobility in-store for small businesses. Jim Magats, SVP, Payments and SMB Solutions, PayPal noted: "We're excited to launch our all-in-one point of sale solution, the Zettle Terminal, which puts an entire store kit in the palm of small business owners' hands."
PYPL's net revenues increased 18.6% year-over-year to $6.24 billion for its fiscal second quarter, ended June 30, 2021. The company's operating income came in at $1.13 billion, up 18.5% year-over-year. Its total assets were $73.82 billion for the period ended June 30, 2021, compared to $70.38 billion for the period ended December 31, 2020.
For its fiscal year 2022, analysts expect PYPL's revenue to be $31.68 billion, representing a 22.9% year-over-year rise. The company's EPS is expected to increase 24.3% year-over-year to $5.88 in its fiscal year 2022. It surpassed the Street's EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 22.2% in price to close yesterday's trading session at $229.46. Furthermore, Wall Street analysts expect the stock to hit $337.67 in the near term, which indicates a potential 47.2% upside.
V shares were trading at $208.07 per share on Wednesday morning, down $1.07 (-0.51%). Year-to-date, V has declined -4.46%, versus a 24.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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