Five Large-Cap Stocks Poised to Rally

Oracle, Colgate-Palmolive, Medco, McDonald's and General Mills are rated 'buy.'
By Jake Lynch ,

BOSTON (

TheStreet

) -- A shift to steady large-cap stocks has helped the group outperform in the past three months. Here are five stocks to consider.

5. Oracle

(ORCL) - Get Report

sells systems software.

The numbers

: Fiscal second-quarter profit increased 13% to $1.5 billion, or 29 cents a share. Revenue grew 4% to $5.9 billion. Oracle's operating margin widened from 36% to 39%. Oracle has a liquid balance sheet, with $21 billion of cash and $15 billion of debt.

The stock

: Oracle returned 40% during the past year, beating the

Dow Jones Industrial Average

and

S&P 500 Index

. The stock trades at a price-to-earnings ratio of 20, a discount to software peers. The shares offer a 0.9% dividend yield.

4. Colgate-Palmolive

(CL) - Get Report

sells toothpaste and soap.

The numbers

: Fourth-quarter profit increased 27% to $631 million, or $1.21 a share, as revenue grew 11% to $4.1 billion. Colgate-Palmolive's operating margin extended from 23% to 25%. We give the company a financial strength score of 9.9 out of 10.

The stock

: Colgate-Palmolive advanced 25% during the past year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 18, a premium to household products peers. The shares offer a 2.2% dividend yield.

3. Medco Health Solutions

(MHS)

is a pharmacy benefit manager.

The numbers

: Third-quarter net income increased 13% to $336 million and earnings per share climbed 19% to 69 cents, boosted by a lower share count. Revenue grew 18% to $15 billion. Medco's operating margin was unchanged at 4%. A quick ratio of 1 and debt-to-equity ratio of 0.7 indicate a stable financial position.

The stock

: Medco advanced 38% during the past year, outpacing the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 26, a premium to health care service peers. Medco doesn't pay dividends.

2. McDonald's

(MCD) - Get Report

sells hamburgers and soft drinks through its franchises.

The numbers

: Fourth-quarter profit increased 23% to $1.2 billion, or $1.11 a share. Revenue grew 7% to $6 billion. The company's operating margin stretched from 26% to 28%. We give McDonald's a financial strength score of 9.9 out of 10.

The stock

: McDonald's climbed 10% during the past year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to restaurant peers. The shares offer a 3.4% dividend yield.

1. General Mills

(GIS) - Get Report

sells cereal and other food products.

The numbers

: Fiscal second-quarter profit increased 50% to $566 million, or $1.66 a share, as revenue inched up 2% to $4.1 billion. The company's operating margin widened from 12% to 22%. A quick ratio of 0.6 reflects poor liquidity. A 1.1 debt-to-equity ratio indicates sizable leverage.

The stock

: General Mills climbed 20% during the past year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 15, a discount to food products peers. The shares offer a 2.8% dividend yield.

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