The technology sector has been on a bullish track in the back half of 2016, cheers to a rebounding U.S. economy that is evident from recently released economic data.The U.S. economy looks much stable now. The third estimate for GDP shows that the U.S. economy improved 3.5% in the third quarter, faring better than the second-quarter’s marginal increase of 1.4%. Other indicators of this improvement include a rise in Consumer Confidence Index, an improving job market as well as encouraging U.S. factory activity data.
Considering the improving trends, the Fed recently increased interest rates from a range of 0.25–0.5% to 0.5–0.75%. This was the first rate hike in 2016 and the second in the last 10 years. Further, the Fed expects three rate hikes next year, higher than two rate hikes projected in the September meeting.
The recent positive data boosted investors’ confidence. In the year-to-date (YTD) period, the Dow Jones Industrial Average (DJI), NASDAQ Composite (IXIC) and S&P 500 (GSPC) gained 14.3%, 8.8% and 10.6%, respectively.
Technology continues to be one of the outperformers. The Technology Select Sector SPDR ETF XLK has returned 14.2% YTD.
Launched in Dec 1998, XLK is a passively managed fund designed to deliver the returns of the U.S. technology stocks. The fund, before expenses, is expected to remain on par with the returns and characteristics of the S&P Technology Select Sector Index.
Why Go for the Large Caps?
Investing in large-cap companies is a safe bet, especially during economic downturns and stringent credit conditions. Many consider large-cap stocks an essential part of their portfolio, given the stability, healthy dividends and safety cushion they offer.
Large-cap funds are ideal investment options for those seeking high returns. These also come with lower risk than small-cap and mid-cap funds.
4 Large Caps that Outperformed the Market
Today we bring four large cap stocks that not only outpaced the market in 2016 but are expected to perform better in the coming years.
We have taken the help of the Zacks Stock Screener to pick stocks that outpaced the market (especially S&P 500 and Technology Select Sector SPDR ETF) this year. These stocks have a market cap of $5 billion or more.
Also, we are narrowing down our choices with the help of our new style score system. Each of these stocks has a Growth Style Score of ‘A’ or ‘B’ and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are the four stocks:
Applied Materials, Inc. AMAT develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.
Shares of Applied Materials are up 76.8% year to date. With a market cap of $35 billion, the stock has a Growth Style Score of ‘A.’ In fact, over the past 60 days, current quarter estimates have risen from 60 cents per share to 66 cents per share, while current year estimates have risen from $2.27 per share to $2.41 per share.
Shares of Applied Materials are up 76.8% year to date. With a market cap of $35 billion, the stock has a Growth Style Score of ‘A.’ In fact, over the past 60 days, current quarter estimates have risen from 60 cents per share to 66 cents per share, while current year estimates have risen from $2.27 per share to $2.41 per share.
Want to find a winning technology stock for 2017? Check out our the Zacks Top 10 Stocks for 2017, which is hand-picked from 4,400 stocks covered by the Zacks Rank. Be one of the first to see the 2017 list>>
APPLIED MATERIALS INC Price and Consensus
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