Large cap companies did not get to where they are by twiddling their thumbs, and this is especially true in the tech space. Today we focused on profitable large cap tech stocks that have grown to their large size due to their strong track records of profits. If you're looking for the next Apple or Google, here are some ideas to get you started on your search.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
We first looked for large cap technology stocks. We then looked for businesses with strong profitability (Net Margin [TTM] >10%)(1-year operating margin>15%). We next screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3).
Do you think these large-cap stocks will trade at a higher valuation? Use our list to help with your own analysis.
1) ASML Holding NV (ASML)
|Industry:||Semiconductor Equipment & Materials|
ASML Holding NV has a Net Margin of 24.84%, a Operating Profit Margin of 27.78%, and a Analysts' Rating of 2.00. The short interest was 1.29% as of 07/01/2012. ASML Holding N.V., through its subsidiaries, engages in the design, manufacture, market, and servicing of semiconductor processing equipment used in the fabrication of integrated circuits.
2) Intuit Inc. (INTU)
Intuit Inc. has a Net Margin of 17.61%, a Operating Profit Margin of 27.56%, and a Analysts' Rating of 1.90. The short interest was 2.94% as of 07/01/2012. Intuit Inc. provides business and financial management solutions for small and medium-sized businesses, consumers, accounting professionals, and financial institutions primarily in the United States, Canada, India, Singapore, and the United Kingdom. The company offers QuickBooks financial and business management software and services, technical support, financial supplies, and Web site design and hosting services for small and medium-sized businesses; and payroll products and services, as well as merchant services comprising credit and debit card processing, electronic check conversion, and automated clearing house services for small businesses. It also provides TurboTax income tax preparation products and services for consumers and small business owners; Lacerte and ProSeries professional tax products and services; and QuickBooks Premier Accountant Edition and the QuickBooks ProAdvisor Program for accounting professionals.
3) VMware, Inc. (VMW)
|Industry:||Technical & System Software|
VMware, Inc. has a Net Margin of 19.85%, a Operating Profit Margin of 20.08%, and a Analysts' Rating of 2.20. The short interest was 4.04% as of 07/01/2012. VMware, Inc. provides virtualization and virtualization-based cloud infrastructure solutions in the United States and internationally. The company's products address planned and unplanned downtime management, system recoverability and reliability, backup and recovery, resource provisioning and management, capacity and performance management, and security issues. Its cloud infrastructure products and technologies include VMware vSphere, which is a data center platform that also enables live migration of actively running virtual machines across servers or storage locations without disruption or downtime; enables availability for all applications against hardware and operating system failures; and enables centralized point of control for cluster-level networking, as well as automatically manages the placement and balancing of a virtual machine across storage resources.
4) Intel Corporation (INTC)
|Industry:||Semiconductor - Broad Line|
Intel Corporation has a Net Margin of 23.16%, a Operating Profit Margin of 31.36%, and a Analysts' Rating of 2.40. The short interest was 2.35% as of 07/01/2012. Intel Corporation designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe, and Japan. The company offers microprocessors that process system data and controls other devices in the system; and chipsets, which sends data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive or solid-state drive, and CD, DVD, or Blu-ray drives; system-on-chip products that integrate its processing functions with other system components, including graphics, audio, and video onto a single chip; wired network connectivity products; and wireless connectivity products. It also provides mobile phone components comprising baseband processors, radio frequency transceivers, and power management integrated circuits; and mobile phone platforms, such as Bluetooth wireless technology and GPS receivers, software solutions, customization, and interoperability tests.
5) American Tower Corporation (AMT)
|Industry:||Diversified Communication Services|
American Tower Corporation has a Net Margin of 19.41%, a Operating Profit Margin of 37.86%, and a Analysts' Rating of 1.70. The short interest was 1.11% as of 07/01/2012. American Tower Corporation, a real estate investment trust, operates as a wireless and broadcast communications infrastructure company. It develops, owns, and operates communications sites. The company's rental and management operations include leasing antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries; managing rooftop and tower sites for property owners; operating in-building and outdoor distributed antenna system (DAS) networks; and managing lease property interests under carrier or other third-party communications sites.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.