It’s looking increasingly like we’re headed for a shift in the market’s status quo. The aftershock of 2008 has put us in a zero interest rate policy (aka, ZIRP) that has lasted more than a decade now. And mega-cap stocks are a smart way to keep your portfolio healthy through the transition.

When ZIRP launched, it was a leap into the unknown. No one knew if it was going to even work, much less how long it would last. It was a wrenching transition, but after it was done, the market stayed on a bull run for a very long time. And mega-cap stocks led the way.

We now have six stocks with a market cap above $1 trillion. There were none in 2010. But after this central bank-led era of ZIRP and expanding markets, inflation can’t be stemmed any longer.

These six mega-cap stocks will be harbors from the storm at least and strong growth picks at best.

  • Exxon Mobil (NYSE:XOM)
  • Cisco Systems (NASDAQ:CSCO)
  • Disney (NYSE:DIS)
  • Alphabet (NASDAQ:GOOG)
  • Berkshire Hathaway (NYSE:BRK.B)
  • Microsoft (NASDAQ:MSFT)

Mega-Cap Stocks: Exxon Mobil (XOM)

One of the original Big Oil companies, its mantle of largest publicly traded oil company in the world was usurped by Saudi Aramco in recent years. But Aramco is state-owned, so XOM remains the biggest predominantly publicly held firm.

However, up until recently, massive integrated oil companies weren’t doing well. The pandemic certainly hammered them. But even before that, the global economy was chugging along with low growth and low interest rates. Alternative energy was becoming big, and electric vehicles were starting to show up in greater numbers.

Well, those days are quickly passing behind us. And XOM is back. Its earnings are still negative, but that will change quickly.

XOM stock is up 55% year-to-date and it even has an inflation-beating 5.5% dividend to add to its attraction.

This stock has an ‘A’ rating in my Portfolio Grader.

Cisco Systems (CSCO)

This tech firm has seen plenty of market transitions over the years. Launched in the mid-1980s, CSCO was the king of the networking companies as the dotcom boom got underway.

It was one of the leading companies that brought in the concept of EBITDA and all-stock buyouts of other tech firms. Those were some wild times. Now, it’s an old timer in the tech world and has a nearly $240 billion market cap. And in a sure sign of its maturity, it also has a 2.6% dividend to keep its long-term investors happy.

It may not grab the headlines like it did in the ‘90s, but it’s still a force in the networking, mobility and security markets. Its durability and market leadership makes it a worthy member of the mega-cap stocks club.

This stock has a ‘B’ rating in my Portfolio Grader.

Mega-Cap Stocks: Disney (DIS)

Last week was not a good week for DIS. It lost 9% on the week after its earnings call. Many analysts cut their price and earnings expectations after hearing that Disney+ streaming service isn’t looking to regain much traction until late next year.

The company will be adding twice as much content from its current products in the meantime. That may help keep the service moving until more original content becomes available.

But instead of running away from this iconic content provider, this is a great time to buy it on sale. And that doesn’t happen very often.

DIS stock’s current challenges don’t change its status as one of the most formidable mega-cap stocks out there. This company has been around for nearly 100 years now, and it’s still a powerful player in the entertainment industry. And an expanding economy with the pandemic waning are all good signs for DIS moving forward.

The stock has a ‘B’ rating in my Portfolio Grader.

Alphabet (GOOG)

When you have a market cap nearing $2 trillion and your stock has gained 70% YTD, you know you’re onto something good.

This is why GOOG is in this list of mega-cap stocks. It continues to be the biggest winner in internet advertising revenue and its mantle isn’t likely to be usurped anytime soon. From its humble beginnings as a free search engine to its current status is an amazing journey.

And it’s not just its advertising revenue at this point. It also runs the world’s most popular mobile OS. It has a family of phones and other products that are gaining traction. It’s a leading cloud company with plans to expand in this sector. And it has dozens of other products growing and preparing for launch.

If things get dicey, GOOG is going to be a very popular port in the storm. And if everything keeps humming along, GOOG will be a winner as well.

This stock has a ‘B’ rating in my Portfolio Grader.

Mega-Cap Stocks: Berkshire Hathaway (BRK.B)

For as long as I can remember, Warren Buffett’s BRK.B has always come under attack in big bull markets. Financial writers always talk about how the fund underperforms the market in good times and maybe Buffett has lost a step or two. That’s been going on for decades.

BRK.B continues to perform and draw in new investors. Why? Because it’s all about the long term. There’s an analogy about climate and weather that works for explaining BRK.B.

If you’re walking a dog on the beach, the dog will run up and down and side to side as the owner walks from point A to point B. The is like weather and the owner is like climate. Long term versus short term. The dog and owner end up in the same place.

And so it is with BRK.B. The stock may not have the big runs, but it also avoids the big falls. It keeps outperforming year in and year out. The stock has gained 55% YTD and has a price-to-earnings ratio slightly above 6x.

This stock has a ‘B’ rating in my Portfolio Grader.

Microsoft (MSFT)

While the title moves around a bit, MSFT currently has the highest market cap of any U.S.-listed stock at $2.5 trillion. And it’s up 55% YTD.

This is the underlying power of these mega-cap stocks. It’s not only individual investors but institutional investors that see the value of these massive companies with global reach when the market starts to shift. And institutional investors have significantly more buying power than individual investors.

The reason I’m featuring these mega-cap stocks is the sheer fact that institutional investors see the changes coming and they’re moving into these shares as we speak. This is how the smart money makes maximizes changes in the economic cycle.

Buy big and buy the best. Then, regardless of what happens, you have the best safety stocks available and the stocks most likely to succeed once the market regains its stride.

This stock has a ‘B’ rating in my Portfolio Grader.

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