Go big and get defensive for the rest of the year.
After the “risk on” rallies of the last several years, we’ve seen a decidedly “risk off” approach to stocks in 2022. That’s because of a host of factors, including inflationary pressures pinching both consumers and businesses, as well as rising interest rates that have increased borrowing costs. Throw in the uncertainty of war in Ukraine along with a growing concern that supply chain disruptions may be a permanent feature of the global economy, and it’s hard to have faith in small-cap growth stocks as in past years. On the other hand, the following seven companies all offer a lower risk profile and market values north of $18 billion to provide some stability to your portfolio. And best of all, each of these seven large-cap stocks is up in 2022 even as the S&P 500 continues to struggle.
Constellation Energy Corp. (ticker: CEG)
Though classified as a utility stock, the $18 billion CEG is as much of a play on sustainability and green energy as anything else. The firm generates and sells electricity across a host of deregulated markets in the U.S. thanks to an extensive network of nuclear, wind, solar, natural gas and hydroelectric assets. Constellation was formerly a subsidiary of the larger utility stock Exelon Corp. (EXC), but was spun out in February and streamlined to spur growth. The firm has hit the ground running, recently announcing long-term agreements to supply Sheetz and Comcast with green energy, and earnings are set to grow more than 45% from fiscal 2022 to fiscal 2023 as a result. Wall Street likes the reliable sector CEG is in plus this growth-oriented approach, and shares are up 20% or so since it launched as a standalone stock in February.
Exxon Mobil Corp. (XOM)
While some investors have zeroed in on a specific part of the energy chain via explorers, refiners or pipeline players, the simplest way to play the tail wind in this sector is to go for the biggest name in the U.S.: Exxon. This integrated energy giant does every step of the process. And furthermore, it’s not just limited to oil. Longtime investors will remember that in the depths of the financial crisis, it ponied up $31 billion to diversify into natural gas with the acquisition of XTO Energy. Given that natural gas is seen by many as the “cleanest” fossil fuel when compared with coal or oil, this will ensure XOM remains at the center of the energy transition as it continues to provide necessary sources of power generation for many years to come.
Kraft Heinz Co. (KHC)
A few years ago, Kraft Heinz was the poster child for Wall Street shenanigans. A bloated mega-merger followed by allegations of phony accounting brutalized the stock, as shares fell from over $90 apiece in 2017 to a pandemic-era low in the $20s. But as things have gotten decidedly “risk off” in 2022, investors have come around again to this packaged foods giant thanks to the negativity being fully priced in and its strong stable of consumer brands, such as its best-in-class ketchup and macaroni and cheese. After all, while it may be hard to stomach a host of rising prices right now, it’s very unlikely for American families to skimp on these go-to items in the grocery aisles. The result of a recent flight to quality among investors has resulted in a turnaround for Kraft Heinz, as shares of the $54 billion consumer giant have added more than 20% in 2022 amid an otherwise down market.
Lockheed Martin Corp. (LMT)
Look, let’s admit upfront that the carnage in Ukraine is a massive humanitarian and geopolitical crisis. However, the reality is that uncertainty sparked by Russian aggression has resulted in big boosts to defense spending — both domestically, as well as in Europe. That makes this for-profit aerospace and defense company in high demand. As long as you don’t mind that your investment in this $115 billion for-profit company helps power deadly drones, missiles and fire-control systems, this stock could be worth a look right now. Earnings should jump by almost 20% this year, and the stock is up more than 15% in the last 12 months even as the rest of Wall Street has struggled.
McKesson Corp. (MCK)
A leader in health care equipment and supplies, McKesson provides a host of essentials to doctors offices, surgery centers and hospitals nationwide. Its offerings include boring fare like generic and over-the-counter drugs, along with high-tech robotic surgery tools. Health care is a recession-proof industry because patients will seek out care no matter what, and the diversified offerings of MCK should continue to provide reliable revenue for shareholders regardless of the macroeconomic environment. Shares of this $47 billion health company have surged nearly 70% in the last 12 months and show little sign of slowing down as they remain within spitting distance of yet another 52-week high as we enter the summer months.
Mosaic Co. (MOS)
A $22 billion giant of agribusiness, Mosaic produces various crop nutrients including concentrated phosphate and potash. This has always been a very steady business as a hungry global population with a limited number of commercial farms means that it’s crucial to squeeze the maximum yield out of every acre. This value proposition of Mosaic fertilizers is even more pronounced amid supply chain disruptions and food price inflation. The company is plotting a remarkable surge of more than 70% in revenue this fiscal year thanks in part to these trends, and has seen shares surge almost 80% in the last year thanks to strong investor interest.
Occidental Petroleum Corp. (OXY)
Though perhaps not one of the best known Big Oil stocks out there, Occidental is a $60 billion energy powerhouse that is focused mainly on exploration and production. That has been a decidedly good business to be in over the last year or so of soaring energy prices. Case in point: Shares are up an amazing 150% in the last 12 months. However, this large-cap stock is not just a flash in the pan based on strong institutional buying pressure. Warren Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) just increased its stake, bringing the investing icon’s position up to more than 220 million shares. Berkshire rarely “churns” holdings for a quick gain, so this increased stake is a strong sign of the long-term potential in this oil stock.
7 of the best large-cap stocks to buy for 2022:
— Constellation Energy Corp. (CEG)
— Exxon Mobil Corp. (XOM)
— The Kraft Heinz Co. (KHC)
— Lockheed Martin Corp. (LMT)
— McKesson Corp. (MCK)
— The Mosaic Co. (MOS)
— Occidental Petroleum Corp. (OXY)
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Update 05/18/22: This story was published at an earlier date and has been updated with new information.