Five Large-Cap Stocks Set to Gain

Medco, IBM, Colgate-Palmolive, DirecTV and McDonald's are rated 'buy' by TheStreet.com.
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BOSTON (

TheStreet

) -- Economic worries could spur investors to seek out blue-chip stocks this quarter. These companies would benefit from that trend.

5. 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 gross margin remained steady at 7% and its operating margin was unchanged at 4%. A quick ratio of 1 reflects adequate liquidity. A debt-to-equity ratio of 0.7 indicates reasonable leverage.

The stock

: Medco has advanced 46% this year, more than major U.S. indices. The stock trades at a price-to-earnings ratio of 25, a premium to the market and health care service peers. Medco doesn't pay dividends.

4. IBM

(IBM) - Get Report

sells technology products and consulting services.

The numbers

: Third-quarter net income rose 14% to $3.2 billion and earnings per share climbed 17% to $2.30, boosted by a lower share count. Revenue decreased 7% to $24 billion. IBM's gross margin rose from 48% to 50% and its operating margin ascended from 16% to 18%. A quick ratio of 1.1 indicates adequate liquidity. A debt-to-equity ratio of 1.4 demonstrates higher-than-ideal leverage.

The stock

: IBM has rallied 50% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to the market and information technology peers. The shares pay a 1.7% dividend yield.

3. Colgate-Palmolive

(CL) - Get Report

sells personal products, including toothpaste and soap.

The numbers

: Third-quarter net income rose 18% to $591 million and earnings per share climbed 19% to $1.12, boosted by a lower share count. Revenue remained flat at $4 billion. The company's gross margin rose from 59% to 61% and its operating margin ascended from 21% to 24%. A quick ratio of 0.7 indicates less-than-ideal liquidity. A debt-to-equity ratio of 1.1 reflects higher-than-ideal leverage.

The stock

: Colgate-Palmolive has advanced 19% this year, more than the

Dow Jones Industrial Average

, but less than the

S&P 500 Index

. The stock trades at a price-to-earnings ratio of 20, a discount to the market, but a premium to household products peers.

2. DirecTV

(DTV)

provides satellite television.

The numbers

: Third-quarter net income increased marginally to $366 million and earnings per share climbed 12% to 37 cents, boosted by a lower share count. Revenue grew 10% to $5.5 billion. DirecTV's gross margin declined from 50% to 49%, but its operating margin remained steady at 13%. A quick ratio of 1.1 indicates adequate liquidity. A debt-to-equity ratio of 1.7 reflects excessive leverage.

The stock

: DirecTV has ascended 25% this year, more than the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 22, indicating a premium to the market, but on par with cable and satellite peers. DirecTV doesn't pay dividends.

1. McDonald's

(MCD) - Get Report

sells hamburgers and French fries through restaurant franchises.

The numbers

: Third-quarter net income increased 6% to $1.3 billion and earnings per share climbed 10% to $1.15, boosted by a lower share count. Revenue declined 4% to $6 billion. The company's gross margin rose from 43% to 45% and its operating margin increased from 28% to 31%. A quick ratio of 0.9 reflects less-than-ideal liquidity. A debt-to-equity ratio of 0.8 demonstrates reasonable leverage.

The stock

: McDonald's is flat this year, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to the market and restaurant peers. Shares pay a 3.5% dividend yield.

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-- Reported by Jake Lynch in Boston.