Oracle, McDonald's: Top 5 Large-Cap Stocks
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BOSTON (
) -- These companies have market caps over $10 billion and "buy" ratings from our quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.
Oracle
(ORCL) - Get Report
sells computer networking and database software.
The numbers
: Fiscal fourth-quarter net income fell 7% to $1.9 billion and earnings per share decreased 3% to 38 cents, cushioned by a lower share count. Revenue declined 5% to $6.9 billion. Its gross margin rose from 82% to 84% and its operating margin remained steady at 43%. The company holds $13 billion of cash reserves, amounting to a quick ratio of 1.9. A debt-to-equity ratio of 0.4 indicates conservative leverage.
The stock
: Oracle has increased 28% this year, outpacing the
Dow Jones Industrial Average
and
S&P 500 Index
. The stock trades at a price-to-earnings ratio of 21, on par with the market, but a discount to software peers. The shares offer a dividend yield that's less than 1%.
McDonald's
(MCD) - Get Report
sells hamburgers and French fries at its fast-food restaurants.
The numbers
: Second-quarter net income fell 8% to $1.1 billion, or 98 cents a share. Revenue declined 7% to $5.6 billion. Its gross margin climbed from 42% to 44% and its operating margin rose from 27% to 29%. A quick ratio of 1.1 and debt-to-equity ratio of 0.8 demonstrate fiscal stability.
The stock
: McDonald's is down 13% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 14, a discount to the market and other restaurant stocks. The shares offer a 3.7% dividend yield.
Medco Health Solutions
(MHS)
is one of the largest pharmacy benefit managers in the U.S.
The numbers
: Second-quarter net income rose 19% to $312 million and earnings per share jumped 26% to 64 cents, boosted by a lower share count. Revenue increased 17% to $15 billion. Its gross margin was little changed at 7% and its operating margin remained steady at 4%. Medco has less-than-ideal liquidity, reflected in its quick ratio of 0.9. A debt-to-equity ratio of 0.8 indicates reasonable leverage.
The stock
: Medco has advanced 32% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 23, a premium to the market and health care peers. The company doesn't pay dividends.
Baxter International
(BAX) - Get Report
sells health care equipment.
The numbers
: Second-quarter revenue declined 2% to $3.1 billion, but net income rose 8% to $587 million and earnings per share climbed 13% to 96 cents, boosted by a lower share count. Its gross margin increased from 56% to 57% and its operating margin rose from 22% to 24%. A quick ratio of 1.2 indicates ample liquidity, and a debt-to-equity ratio of 0.6 demonstrates conservative leverage.
The stock
: Baxter has climbed 5% this year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to the market and health care equipment peers. The shares offer a 1.9% dividend yield.
PG&E
(PCG) - Get Report
sells electricity in California.
The numbers
: Second-quarter revenue fell 11% to $3.2 billion, but net income increased 32% to $392 million, or $1.01 a share. Its gross margin jumped from 28% to 33% and its operating margin increased from 16% to 21%. PG&E has a poor financial position, evident in its quick ratio of 0.6 and debt-to-equity ratio of 1.2.
The stock
: PG&E is up 4% this year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 11, a discount to the market and utility peers. The shares offer a 4.2% dividend yield.
-- Reported by Jake Lynch in Boston.
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