5 Large-Cap Companies To Invest In Now And To Own Through 2012

Includes: AAPL, BHP, CSCO, DVMT, F
by: Kevin M. O'Brien

In this article, I will list five large-cap companies whose stocks offer a lot of upside and would be great buys right now, and would also be good to hold through 2012. These are fundamentally stable companies that I believe are trading at a significant discount.

Minimally, I am expecting a 20% increase in share price for each of these stocks from current price to the end of 2012.

Even if the economy doesn't recover as quickly as hoped for, I feel these stocks will continue to rise. Each one of these stocks are off of their 52-week highs.

These companies would be good investments whether you choose to buy the stock or use long-call LEAP options.

Ford Motor Co. (NYSE:F)

Ford develops, manufactures, distributes, and services vehicles and parts worldwide. It operates in two sectors, Automotive and Financial Services.

Ford is very attractively priced right now at $12.08/share. Its 52-week range is between $9.05 - $18.97.

52wk high: 18.97
52wk low: 9.05
EPS: 1.68
PE: 7.40
Div Rate: N/A
Yield: N/A
Market Cap: 45.48 B
Volume: 132.56 M

On Thursday, Moody's upgraded Ford's credit rating to Ba1 from Ba2 with positive outlooks.

I've been waiting for Ford to raise its dividend, and this latest move by Moody's may cause that. It would bring in a lot more institutional buying and retail investors.

Ford's balance sheet and cash-flow statement is solid, too.

Balance Sheet
Total Cash (mrq): 21.76B
Total Cash Per Share (mrq): 5.73
Total Debt (mrq): 98.55B
Total Debt/Equity (mrq): 1,842.06
Current Ratio (mrq): 1.24
Book Value Per Share (mrq): 1.40
Cash Flow Statement
Operating Cash Flow (ttm): 11.25B
Levered Free Cash Flow (ttm): 18.36B

The stock is already down 36.3% from its 52-week high and represents a nice entry point here. Analyst have the following price targets:

Price Target Summary

Mean Target: 17.33
Median Target: 16.00
High Target: 24.00
Low Target: 15.00
No. of Brokers: 15

Even on the lowest target price, Ford right now is still trading lower than than the consensus estimate.

Here is a look at Ford's past EPS numbers and future estimates:

By mid-2012, I can easily see Ford trading for $17.00+/share.

Cisco Systems, Inc. (NASDAQ:CSCO)

Cisco designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide

I've been behind Cisco since it was trading at a little bit over $13.00/share. You can read my previous article on (CSCO) here.

Since that article, Cisco has steadily increased and still looks to be a good value here. It is currently trading at $18.44/share.

52wk high: 24.60
52wk low: 13.30
EPS: 1.17
PE: 15.10
Div Rate: 0.24
Yield: 1.3015
Market Cap: 99.26 B
Volume: 105.74 M

Cisco has seemed to finally get itself together. CEO John Chambers has certainly taken some much deserved criticism over the years for his role in Cisco's under-performing stock, but the arrow finally appears to be moving up. What's unfortunate is that many former shareholders have already given up after years of loyalty to the company and the stock.

Cisco is still the leader over its rivals, such as Juniper (NYSE:JNPR). Besides Apple (NASDAQ:AAPL), you will be hard-pressed to find a better balance sheet than Cisco's. This company is also sitting on a lot of cash. There has been some talk about a dividend increase, which is long overdue. The current 1.4% is somewhat pathetic given the amount of cash (CSCO) has.

Balance Sheet
Total Cash (mrq): 44.58B
Total Cash Per Share (mrq): 8.28
Total Debt (mrq): 16.82B
Total Debt/Equity (mrq): 35.60
Current Ratio (mrq): 3.27
Book Value Per Share (mrq): 8.69
Cash Flow Statement
Operating Cash Flow (ttm): 10.08B
Levered Free Cash Flow (ttm): 5.89B

I still believe Cisco will be trading in the mid $20's by February/March 2012. This would be a very nice increase from current levels. Call options are still very reasonably priced right now, as well.

Even with the move up in price the last few months, Cisco is still off 24.2% from its 52-week high. Analysts have the following price targets for Cisco:

Price Target Summary

Mean Target: 19.26
Median Target: 18.00
High Target: 25.00
Low Target: 13.50
No. of Brokers: 35

Here is a look at Cisco's past EPS numbers and future estimates:

I actually think these price targets are a bit too conservative. Next year, Cisco should be trading in the upper $20's.

EMC Corp. (EMC)

EMC Corp. develops, delivers, and supports the information and virtual infrastructure technologies and solutions. The company offers enterprise storage systems and software, which are deployed in storage area networks (SAN), networked attached storage (NAS), unified storage combining NAS and SAN, object storage, content addressed storage, and/or direct attached storage environments.

EMC is in a unique position. While EMC has a large market capitalization, they are still growing. Between their acquisitions and the cloud-computing angle , EMC looks ready to seriously move up in price. As recently as October 4th, EMC was trading at $19.99/share. It is currently trading for $25.04/share at Thursday's market close.

52wk high: 28.73
52wk low: 19.84
EPS: 1.01
PE: 23.60
Div Rate: N/A
Yield: N/A
Market Cap: 51.71 B
Volume: 31.22 M

Also important to keep in mind is that EMC owns 80% of all outstanding shares in VMware (NYSE:VMW), one of the leaders in cloud-computing. Last week, both EMC and VMW reported stellar earnings in a tough environment. Profit rose 28%. EMC will certainly benefit from VMware's growth, as well.

On Thursday, EMC's stock went up 5.25%. It has been outperforming the market for the last month.

EMC Corp. is another company that is in excellent financial condition. While this does not always influence share price, it adds to my conviction in being a strong buy.

Balance Sheet
Total Cash (mrq): 4.76B
Total Cash Per Share (mrq): 2.33
Total Debt (mrq): 3.43B
Total Debt/Equity (mrq): 18.22
Current Ratio (mrq): 1.00
Book Value Per Share (mrq): 8.78
Cash Flow Statement
Operating Cash Flow (ttm): 5.00B
Levered Free Cash Flow (ttm): 1.85B

Even at its current price, EMC is still a great buy. Analysts have the following price targets for EMC:

Price Target Summary

Mean Target: 29.77
Median Target: 30.00
High Target: 33.00
Low Target: 23.00
No. of Brokers: 32

Even before EMC reported their 3rd quarter earnings last week, Forbes had a price target of $38.00/share. I agree with this assessment. Please see this link for more information.

Here is a look at EMC Corp. EMC past EPS numbers and future estimates:

EMC is down 13.4% from its 52-week high.

BHP Billiton Limited (NYSE:BHP)

BHP operates as a diversified natural resources company worldwide. The company engages in the exploration, development, and production of oil and gas; mining and refining of bauxite into alumina, and smelting of alumina into aluminum metal; and mining of copper, silver, lead, zinc, molybdenum, uranium, gold, diamonds, and titanium minerals, as well as development of potash deposits.

BHP Billiton is an all-purpose company. Its current price is $83.77/share, yet it still seems undervalued. The 52-week range is $62.54 - $104.59.

52wk high: 104.59
52wk low: 62.54
EPS: 8.54
PE: 9.10
Div Rate: 2.20
Yield: 2.6316
Market Cap: 224 B
Volume: 7.07 M

As you can see from the chart above, BHP looks to be moving in an upward trend. I would be extremely surprised if this stock isn't trading north of $100/share by early next year.

Here is a closer look at their balance sheet:

Balance Sheet
Total Cash (mrq): 10.13B
Total Cash Per Share (mrq): 3.81
Total Debt (mrq): 15.96B
Total Debt/Equity (mrq): 27.63
Current Ratio (mrq): 1.28
Book Value Per Share (mrq): 21.33
Cash Flow Statement
Operating Cash Flow (ttm): 30.08B
Levered Free Cash Flow (ttm): 16.08B

BHP has a very low short interest at 0.77%, which can indicate that a stock is undervalued.

BHP's price-to-earnings (P/E) ratio is 9.81, along with an earnings-per-share (EPS) currently at 8.54.

Analysts have the following price targets for BHP:

Price Target Summary

Mean Target: 80.22
Median Target: 80.00
High Target: 116.00
Low Target: 44.66
No. of Brokers: 3

This stock can be very volatile at times, even though it only has a beta of 1.48. A quick run-up to the $100/share price range is very possible before 2011 is over.

Apple, Inc. (AAPL)

Apple designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide.

As I've written in previous Seeking Alpha articles, I firmly believe Apple will be trading above $500/share by this time next year.

Currently trading at $404.69/share as of Thursday's market close, AAPL is poised to go higher.

52wk high: 426.70
52wk low: 297.76
EPS: 27.68
PE: 14.50
Div Rate: N/A
Yield: N/A
Market Cap: 375.18 B
Volume: 17.67 M

Should AAPL reach $500/share by next year, this would be an almost 25% gain. An interesting number released by Motorola Mobility (NYSE:MMI) on Thursday was that they said it shipped only 100k of Google's (NASDAQ:GOOG) XOOM Android tablets in their latest Q3 report. Compare this to Apple's tablet dominance of shipping 11.1 million in their own Q3 report.

Apple iPhone sales should be excellent next quarter. The only reason their last earnings report was soft on sales of the iPhone was that consumers were waiting for the release of the latest iPhone model. Here is a closer look at past EPS numbers and future estimates:

As I mentioned before with Cisco, Apple's balance sheet is the envy of any company:

Balance Sheet
Total Cash (mrq): 25.95B
Total Cash Per Share (mrq): 27.93
Total Debt (mrq): 0.00
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 1.61
Book Value Per Share (mrq): 82.45
Cash Flow Statement
Operating Cash Flow (ttm): 37.53B
Levered Free Cash Flow (ttm): 19.75B

My guess is that Apple is going to demolish their Q1 estimates. We already know that Apple sold over four million of the latest model iPhones in the first three days it was available.

Analysts also have a very bullish view on Apple, as seen below:

Price Target Summary

Mean Target: 502.55
Median Target: 500.00
High Target: 700.00
Low Target: 210.00
No. of Brokers: 47

I believe the only downside pressure on Apple stock is at $360/share. Whether or not Apple's stock price will ever hit that low anytime soon is debatable.

Apple also has a tendency to run-up in price pre-earnings, which will be preliminarily released on January 18, 2012.

Good luck.

Disclosure: I am long AAPL, EMC, CSCO.

Additional disclosure: I will also be opening positions in (F) and (BHP) via call options. I am already long calls on (AAPL) and (CSCO) and (EMC)