Four Mega-Caps Ready to Rumble

02/28/2011 10:28 am EST


Charles Carlson

Editor, DRIP Investor

A Bank With Bite
I am still not a big fan of most banks. However, I am warming to JPMorgan (NYSE: JPM). I think banks as a group will have a better year in 2011, and Morgan is the quality play in the group.

I like the bank’s top management, its breadth of services, and its diversified revenue streams. I especially like its cheap valuation. I expect the company to step up its dividend sharply this year.

Computer Giants Gearing Up
Two favorite technology stocks on the list are Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT). Intel put up solid numbers in the latest quarter, although the stock did not respond well to the earnings. That’s a bit of a worry, as are Wall Street’s fears that the firm is missing out on the growth opportunities in the mobile computing markets (smart phones and tablets).

Still, I’m confident that Intel’s product-development prowess will help the company gain a meaningful presence in the fastest-growing markets in the tech sector. And I believe growth-and-income stocks like Intel will get better play on Wall Street this year.

Intel is boosting its dividend 15% to a quarterly rate of $0.1812 per share.

Microsoft has been out of favor for many of the same reasons that have adversely impacted Intel, such as fears concerning the decline of the PC. But Microsoft, too, has plenty of weapons at its disposal, not the least of which is a huge cash holding that it can use for product development and acquisitions.

Big Box, Huge Stock
One final stock I want to highlight is Wal-Mart Stores (NYSE: WMT). Wall Street has not exactly embraced mega-cap stocks in the last couple of years, which has made stocks like Wal-Mart exceptionally cheap.

Investors get a decent cash-flow stream from the 2.2% dividend yield while waiting for a turnaround. I think the value these shares offer will finally pull in investors in 2011.

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