The following large-cap stocks have had sound performances on the stock market over the past several years.
These companies benefit from solid financial situations that are the result of return on invested capital ratios that are more than 800 basis points higher than the weighted average cost of capital ratio.
Further, sell-side analysts on Wall Street issued recommendation ratings ranging between overweight and buy, suggesting the following securities will continue to perform well over the next 12 months.
Johnson & Johnson (JNJ, Financial) has gained 2.9% over the last week, 3.9% over the past month, 11.8% so far this year, 17.9% over the past 52 weeks and 24.8% over the last three years through June 25.
The New Jersey-based health care company has paid dividends since 1962. Currently, Johnson & Johnson pays a quarterly dividend of 95 cents per common share, which - based on the closing price of $144.24 on Tuesday – generates a forward dividend yield of 2.66% versus the industry median of 1.66%.
The stock has a market capitalization of $382.97 billion, a price-earnings ratio of 26.7 versus the industry median of 23.77 and a price-sales ratio of 4.81 compared to the industry median of 3.1.
Johnson & Johnson has a return on invested capital ratio of 21.53%, which tops the weighted average cost of capital ratio of 6% by 1,553 basis points.
Wall Street issued an overweight recommendation rating for shares of Johnson & Johnson with a price target of $148.83, reflecting 3.2% upside from the closing price on Tuesday.
The Peter Lynch chart suggests the stock may be overvalued.
Nestle SA (NSRGY, Financial) has gained 0.9% over the past week, 4.1% over the last month, 27.4% year to date, 36.1% over the last 12 months and 42.1% over the past three years through June 25.
The Swiss food and beverage company has paid dividends since 1997. On May 24, Nestle paid an annual dividend of $2.424 per common share. The forward dividend yield is 2.34% compared to the industry median of 2.35%.
The stock was trading around $103.14 per share on Tuesday for a market capitalization of $309.02 billion. The stock has a price-earnings ratio of 30.15 versus the industry median of 18.26 and a price-sales ratio of 3.34 versus the industry median of 0.95.
At 13.17%, the stock’s return on invested capital is 814 basis points above the weighted average cost of capital ratio of 5.03%.
The Peter Lynch chart suggests the stock is expensive.
Visa Inc. (V, Financial) has climbed 1.2% over the last week, 5.3% over the last month, 29.8% year to date, 29.2% over the last 52 weeks and 128.2% over the past three years through June 25.
The company has distributed dividends since 2008. Currently, the quarterly dividend is 25 cents per common share, which – based on the closing price of $171.28 on Tuesday – grants a forward dividend yield of 0.58%.
The San Francisco-based international credit services company has a market capitalization of roughly $391.68 billion, a price-earnings ratio of 35.38 versus the industry median of 16.14 and a price-sales ratio of 18.19 versus the industry median of 3.46.
Visa has a return on invested capital ratio of 28.61%, which surpasses the weighted average cost of capital ratio of 14.5% by 2,164 basis points.
Wall Street recommends buying Visa. The average target price is $182.50, which represents 6.6% upside from the closing price on Tuesday.
The Peter Lynch chart suggests the stock is not cheap.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 2 Large Caps Release Quarterly Earnings
- Medtronic to Extinguish Up to $4.17 Billion in Debt
- AbbVie Buys Allergan for Over $60 Billion
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