Three Large-Cap Stocks With Bullish Backing

Wal-Mart, Colgate-Palmolive and Medco Health Solutions are TheStreet Ratings' favorite large-cap companies.

Author:: Jake Lynch
Publish date:: Apr 13, 2010 7:48 AM EDT

BOSTON (TheStreet) -- Large-cap stocks have lagged behind small- and mid-caps during the past year. TheStreet's quantitative equity model, which ranks stocks on fundamentals and performance, rates these large-caps "buy." Analysts are overwhelmingly bullish on the shares.

3. Wal-Mart

(WMT) - Get Report

is the world's largest retailer.

Quarter

: Fourth-quarter profit increased 22% to $4.6 billion, or $1.23, as revenue grew 4.5% to $114 billion. The operating margin widened from 6.2% to 6.6%. Wal-Mart has $7.9 billion of cash and $41 billion of debt, translating to a debt-to-equity ratio of 0.6.

Stock

: Wal-Mart has advanced 8% during the past year, trailing U.S. indices. It trades at a price-to-earnings ratio of 15, a price-to-projected-earnings ratio of 13 and a price-to-cash-flow ratio of 7.9, 42%, 16% and 23% discounts to industry averages.

Consensus

: Of analysts following Wal-Mart, 23, or 79%, advise purchasing its shares and six recommend holding them.

HSBC

(HBC)

projects the stock will climb 24% to $68.

Bank of America

(BAC) - Get Report

and

Goldman Sachs

(GS) - Get Report

predict the shares will hit $65.

>> Who Owns Wal-Mart?: Warren Buffett

2. Colgate-Palmolive

(CL) - Get Report

makes toothpaste and soap.

Quarter

: Fourth-quarter profit expanded 27% to $631 million, or $1.21, as revenue extended 11% to $4.1 billion. The operating margin rose from 23% to 25%. Colgate has $641 million of cash and $3.2 billion of debt, amounting to a debt-to-equity ratio of 1.

Stock

: Colgate-Palmolive has risen 41% during the past 12 months, more than the

Dow Jones

and

S&P 500 Index

. It sells for a price-to-sales ratio of 2.7 and a price-to-cash-flow ratio of 13, 22% and 19% premiums to peer-group averages.

Consensus

: Of researchers evaluating Colgate-Palmolive, eight rate its stock "buy" and 13 rate it "hold." Goldman Sachs expects the stock to climb 17% to $99.

UBS

(UBS) - Get Report

believes it will hit $93 and

RBC

(RY) - Get Report

thinks the shares will touch $88.

>> Who Owns Colgate?: Navellier & Associates

1. Medco Health Solutions

(MHS)

is a pharmacy-benefits manager.

Quarter

: Fourth-quarter profit increased 25% to $342 million, or 70 cents, as revenue grew 18% to $15 billion. The operating margin narrowed from 4% to 3.8%. Medco has $2.5 billion of cash and $4 billion of debt, translating to a debt-to-equity ratio of 0.6.

Stock

: Medco has soared 53% during the past year, more than benchmarks. It trades at a price-to-sales ratio of 0.5 and a price-to-cash-flow ratio of 8.7, 35% and 12% discounts to industry averages. It's expensive based on projected earnings.

Consensus

: Of firms covering Medco, 26, or 81%, advocate purchasing its shares and six counsel holding them.

Citigroup

offers a price target of $82, leaving a potential 28% of upside.

Deutsche Bank

(DB) - Get Report

sees the stock hitting $78.

-- Reported by Jake Lynch in Boston.