Experienced investors understand that a certain amount of risk accompanies all investments, no matter the size of the company. While large cap stocks tend to have less volatility than smaller companies, it is always necessary to fully investigate a company before investing. For our list today, we scanned for companies that are reliable earners that have not heavily borrowed against assets to keep the business going. All of the large cap stocks we included have strong profit margins and minimal long term debt. When these attributes are put together it points to companies with strong infrastructure and financial oversight. If these traits intrigue you, then you will like the list of large cap stocks we developed.
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.
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 Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
We first looked for large cap stocks. We then looked for businesses with strong profit margins (1-year operating margin>15%)(Net Margin [TTM] >10%). Next, we then screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We did not screen out any sectors.
Do you think these large-cap stocks have higher to rise? Use our list along with your own analysis.
1) Chunghwa Telecom Co. Ltd. (NYSE:CHT)
|Industry||Telecom Services - Domestic|
|Operating Profit Margin||27.42%|
|Long Term Debt/Equity Ratio||0.01|
Chunghwa Telecom Co., Ltd. provides integrated telecommunication services primarily in Taiwan. It offers domestic fixed communications services, including local and domestic long distance telephone, broadband access, local and domestic long distance leased line, multimedia-on-demand, Wi-Fi, and domestic data services; mobile communications services comprising mobile, paging, information and communication technology, corporate solution, and bill handling services; Internet, data communication, Internet data center, and other Internet services; international fixed communications services that comprise international long distance telephone, international leased line, international data, satellite, and other services, including the provision of interconnection of its fixed line network and mobile network with other operators; and ICT services, such as cloud computing.
The company also sells mobile handsets and data cards; and leases real estate properties. It primarily serves small and medium-sized enterprises, and large corporations. As of December 31, 2011, its transmission networks consisted of approximately 1.32 million fiber kilometers of fiber optic cable for trunking and approximately 4.19 million fiber kilometers of fiber optic cable for local loop; domestic public switched telephone network consisted of 19 message areas; and Internet access network had 33 points of presence, approximately 1,808 dial-up ports, approximately 5,518,000 broadband remote access server ports, and a bandwidth of approximately 1,740 Gbps.
It also had 3,168 frame relay ports, 150 X.25 ports, 2,686 asynchronous transfer mode ports, and approximately 66,655 multi protocol label switching Internet protocol virtual private network virtual ports. It provided ADSL and FTTx services to 4.5 million customers; local telephone services to approximately 12.08 million customers; and MOD services to 1.05 million customers. The company was founded in 1996 and is headquartered in Taipei, Taiwan.
2) Infosys Ltd. (NYSE:INFY)
|Industry||Technical & System Software|
|Operating Profit Margin||29.22%|
|Long Term Debt/Equity Ratio||0.00|
Infosys Technologies Limited, a technology services company, defines, designs, and delivers information technology enabled business solutions. The company, together with its subsidiaries, provides various services, including business consulting, package enabled consulting and implementation, custom application development, maintenance and production support, technology consulting, business process management and solutions, product engineering solutions, infrastructure maintenance services, validation solutions, and systems integration services.
It also develops, markets, and licenses banking products and solutions, such as Finacle suite, a Web-enabled solution that addresses banks core banking, treasury, wealth management, consumer and corporate e-banking, mobile banking, Islamic banking, and Web-based cash management requirements. In addition, the company provides business process management services, such as offsite customer relationship management, finance and accounting, and administration and sales order processing. It serves banking and capital markets, communications, energy, manufacturing, pharmaceuticals and healthcare, and retail sectors in North America, Europe, and the Asia Pacific region. The company was founded in 1981. It was formerly known as Infosys Consultants Private Limited and changed its name to Infosys Technologies Private Limited in April 1992. Further, it changed its name to Infosys Technologies Limited in June 1992. The company is headquartered in Bangalore, India.
3) Monster Beverage Corporation (NASDAQ:MNST)
|Industry||Beverages - Soft Drinks|
|Operating Profit Margin||27.51%|
|Long Term Debt/Equity Ratio||0.00|
Monster Beverage Corporation, through its subsidiaries, develops, markets, sells, and distributes alternative beverage category beverages in the United States and internationally. The company's Direct Store Delivery segment offers carbonated energy drinks, non-carbonated dairy based coffee plus energy drinks, carbonated energy drinks containing nitrous oxide, non-carbonated dairy based espresso plus energy drinks, non-carbonated rehydration energy drinks, energy supplements, and ready-to-drink iced teas.
This segment sells its products through a distributor network. Monster Beverage Corporation's Warehouse segment provides sodas, juice cocktails, juice products, fruit juice smoothies, seltzer waters, ready-to-drink lemonade plus tea drinks, ready-to-drink aguas frescas, and prebiotic and probiotic digestive wellness ready-to-drink beverages and powder drink mixes, as well as flavored water line. It also offers lemonades, including strawberry, limeade, mango, honey, raspberry, and original lemonades. This segment markets its products primarily directly to retailers.
The company distributes its products principally under the Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, X-Presso Monster, Worx Energy, Peace Tea, Hansen's, Hansen's Natural Soda, Junior Juice, Blue Sky, Hubert's, and Vidration brands. It serves full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, food service customers, and the military. The company was formerly known as Hansen Natural Corporation and changed its name to Monster Beverage Corporation in January 2012. Monster Beverage Corporation was founded in 1985 and is based in Corona, California.
4) Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM)
|Industry||Semiconductor - Integrated Circuits|
|Operating Profit Margin||32.80%|
|Long Term Debt/Equity Ratio||0.06|
Taiwan Semiconductor Manufacturing Company Limited engages in the computer-aided designing, manufacturing, packaging, testing, and selling integrated circuits and other semiconductor devices; and manufacturing masks. It offers a range of wafer fabrication processes, including processes to manufacture complementary metal oxide silicon (CMOS) logic, mixed-signal, radio frequency, embedded memory, BiCMOS mixed-signal, and other semiconductors.
The company's semiconductor products include logic semiconductors that process digital data to control the operation of electronic systems, as well as standard logic devices that include microprocessors, microcontrollers, digital signal processors, graphic chips, and chip sets; and mixed-signal/RF semiconductors, which combine analog and digital devices on a single semiconductor to process analog and digital data for use in hard disk drives, wireless communications equipment, and network communications equipment.
It also offers memory semiconductors that are used in electronic systems to store data and program instructions; CMOS image sensor semiconductors, which are primarily used in camera phones; and high voltage semiconductors, including high voltage CMOS, bipolar-CMOS-DMOS, and ultra-high voltage technology products for use in various panel-size display driver and power IC applications. In addition, the company provides design and technology platforms, and multi-project wafer processing services. It serves fabless semiconductor companies/systems companies and integrated device manufacturers primarily in North America, Asia, and Europe. The company was founded in 1987 and is headquartered in Hsinchu, Taiwan.
5) Paychex, Inc. (NASDAQ:PAYX)
|Industry||Staffing & Outsourcing Services|
|Operating Profit Margin||38.29%|
|Long Term Debt/Equity Ratio||0.00|
Paychex, Inc., together with its subsidiaries, provides payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses in the United States and Germany. The company offers payroll processing services that include the calculation, preparation, and delivery of employee payroll checks; production of internal accounting records and management reports; preparation of federal, state, and local payroll tax returns; and collection and remittance of clients' payroll obligations.
It also provides a software-as-a-service solution to meet the payroll and human resource administrative needs; a suite of self-service online payroll services and products, including Paychex Online Payroll, Internet time sheet, online reports, and general ledger reporting service; payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. In addition, the company offers human resource outsourcing solutions that provide a package of services consisting of payroll, employer compliance, human resource and employee benefits administration, risk management outsourcing, and the on-site availability of a professionally trained human resource representative.
Further, it provides retirement services administration; insurance agency services for property and casualty, business-owner, commercial auto, and health and benefits insurance products; online human resource administration software tools for managing employee benefits, personnel information, and human resource compliance and reporting; and other human resource services products, including employee handbooks, management manuals, and personnel and required regulatory forms. The company markets its services primarily through its direct sales force. As of May 31, 2012, it serviced approximately 567,000 payroll clients. The company was founded in 1971 and is headquartered in Rochester, New York.
6) American Capital Agency Corp. (NASDAQ:AGNC)
|Industry||REIT - Residential|
|Operating Profit Margin||49.73%|
|Long Term Debt/Equity Ratio||0.00|
American Capital Agency Corp. operates as a real estate investment trust (REIT). It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by government-sponsored entities or by the United States government agency. The company funds its investments primarily through short-term borrowings structured as repurchase agreements. It has elected to be taxed as a REIT under the Internal Revenue Code of 1986. As a REIT, the company would not be subject to federal income tax, provided it distributes at least 90% of its taxable income to its shareholders. It is externally managed by American Capital AGNC Management, LLC, which is an affiliate of American Capital, Ltd. American Capital Agency Corp. was founded in 2008 and is based in Bethesda, Maryland.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/02/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer:This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.