Unloved Large-Caps Built for Market Correction

Intuit and Allergan are cheap large-cap stocks that receive little media play.
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BOSTON (TheStreet) -- The larger the company, the worse the performance in this stock-market rally.

Dow

stocks have risen 7.3%, on average, this year. Small-caps in the

S&P 600

, by comparison, have rocketed 18%.

What's worse, large-cap stocks

Intuit

(INTU) - Get Report

and

Allergan

(AGN) - Get Report

receive little press, but rank atop

TheStreet's

5,000-plus coverage universe, with A-grades. Investors concerned about a break in the stock-market rally ought to consider the following unloved large-caps.

Intuit sells financial software, including Quicken and TurboTax, to small businesses and consumers. It purchased personal finance Web service Mint.com in November. During the past three years, it has boosted revenue 10% annually, on average.

Quarter

: Fiscal second-quarter net income jumped 34% to $114 million, but earnings per share declined 3.9% to 25 cents. Revenue grew 8.3%. The operating margin extended from 14% to 17%. The balance sheet holds $946 million of cash and $998 million of debt.

Stock

: Intuit has gained 57% during the past year, outperforming U.S. stock-market indices. It trades at a price-to-projected-earnings ratio of 16 and a price-to-sales ratio of 3.5, 33% and 53% discounts to peer averages. It's also cheap based on cash flow.

Consensus

: Of analysts covering Intuit, 10, or 53%, advise purchasing its shares and nine recommend holding them.

Deutsche Bank

(DB) - Get Report

expects the stock to rise 24% to $45.

Bank of America

(BAC) - Get Report

predicts that the shares will hit $39.

The Speculator's Arithmetic (Forbes)

Thesis

: Intuit sells for a PEG ratio, a measure of value relative to expected growth, of 0.6, an 18% discount to the industry average and a 44% discount to projected long-run growth. Its products, which help save money, are sought after even during a sluggish economy.

Allergan designs pharmaceuticals and medical devices, focusing on eye care and aesthetics. Its Lap-Band and Botox products are lucrative franchises. During the past three years, Allergan has increased net income 90% annually, on average.

Quarter

: Allergan is scheduled to release first-quarter results today. Fourth-quarter profit grew 51% to $222 million, or 72 cents, as revenue climbed 16%. The operating margin rose from 21% to 26%. Allergan has $1.9 billion of cash and $1.5 billion of debt.

Stock

: Allergan has appreciated 32% during the past 12 months, trailing stock-market benchmarks. It sells for a price-to-book ratio of 3.9 and a price-to-sales ratio of 4.1, 18% and 8% discounts to industry averages. It's expensive based on cash flow.

Consensus

: Of researchers following Allergan, 16, or 70%, rate its stock "buy" and seven rate it "hold."

Goldman Sachs

(GS) - Get Report

forecasts a price of $76, leaving a potential 22% return.

UBS

(UBS) - Get Report

foresees the shares climbing 13% to $70.

Thesis

: Allergan sells for a PEG ratio of 0.6, a 45% discount to projected long-term growth. The company's focus on medical aesthetics has elevated its profit spreads. An operating margin of 26% beats those of competitors

Pfizer

(PFE) - Get Report

and

Merck

(MRK) - Get Report

.

-- Reported by Jake Lynch in Boston.