Navigating the intricacies of the stock market requires strategic foresight when selecting the best large-cap stocks to buy. This is the reality, especially when identifying opportunities with robust long term growth prospects.
As investors continue to seek avenues to maximize returns, it is also important to consider the potential downside risks. Warren Buffett famously quoted the most important rule on investing is, ‘’1. Never lose money. And 2. Never forget rule number 1.’’ That is why investing in companies with strong economic moats is paramount.
These 3 companies certainly possess strong industry fundamentals, and favorable market trends will allow them to withstand uncertain times.
Now, let’s unpack the 3 best large-cap stocks ready for lift-off in 2024!
Linde PLC (LIN)
Linde PLC (NASDAQ:LIN) is a poster child when considering the best large-cap stocks to buy. They’re currently the largest industrial gas company in the world by revenue and market share. Evidently, the company is coming off a solid 2023 fiscal year with upbeat guidance for 2024.
Linde serves a wide array of end markets such as food and beverage, energy, electronics, healthcare, manufacturing, and mining. Their robust product portfolio includes specialty gasses, gas mixtures, refrigerants, and packed chemicals. Additionally, the company holds a large share in the hydrogen infrastructure market that is poised for rapid growth over the next decade.
In FY23, revenue declined 2% year-over-year (YOY) to $32.9 billion. While revenue growth was not too great, the company’s bottom line saw significant improvements. Operating profit hit $8.0 billion, with adjusted operating profit margin up 390 basis points, or 27.6% of sales. Furthermore, full year EPS grew 16% as the company navigated a challenging macroeconomic environment. Management forecasts 8-11% EPS growth in FY24, therefore investors should keep a close eye on the company in 2024.
Arista Networks (ANET)
Arista Networks (NYSE:ANET) is an American computer networking company headquartered in Santa Clara, California. They’re one of the biggest sleeper AI stocks to buy and are about to close off a strong 2023 fiscal year.
Arista is a leading end-to-end solutions provider for cloud network infrastructure. The company’s infrastructure is integral as AI accelerates workflows in the cloud. Ultimately, AI data center scalability is a full stack problem and must be solved with robust infrastructure and efficiency. Arista’s Cloudvision platform is set to drive network flow optimization for data centers, while filling in gaps for universal cloud networks.
In Q3 2023, revenue increased 28% to $1.51 billion. EPS skyrocketed 52% to $1.72 per share driven by momentum in both AI/cloud sectors. Management has continued to deliver strong top and bottom line growth in the 2023 fiscal year. They’re currently guiding more revenue growth in excess of 33%. With AI-cloud driven momentum set to continue, Arista is one of the best large-cap stocks to buy for 2024.
Waste Management (WM)
Waste Management (NYSE:WM) shares are up 25% in the past year, and momentum is likely to continue in 2024. CEO James Fish is bullish on the market opportunities in renewable natural gas (RNG) and their ability to increase operating leverage. Additionally, the company’s EBITDA margins are trending in the right direction.
Waste Management is currently trading at all time highs, but its latest financial results suggest growth to continue. Throughout 2023, they have consistently delivered strong operating results. Cost-management discipline has been a key pillar, as management has cut back on SG&A expenses. However, WM does plan to ramp up investment in RNG. This includes approximately $1.215 billion in CAPEX spending by 2026 for 20 new RNG facilities.
Over the next few years, investors can be hopeful of new revenue growth opportunities in RNG. Furthermore, management estimates annual free cash flow to be in excess of $400 million once all the facilities are complete by 2027. This will be a massive growth driver for the company, increasing its sustainability profile and driving incremental shareholder value overtime.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
