Investors looking for stable growth stocks can get ideas from the holdings of equity funds that are focused on large-cap investing and only long stocks.
Usually, large-cap stocks have less variability and volatility than small-cap stocks, and long positions are less risky than short positions as the latter's potential loss is unlimited.
Each quarter, RBC analyzes hundreds of long-only large-cap fund holdings to see what stocks they are buying the most. RBC calls these stocks "rising suns," because the firm says they usually climb gradually after being bought.
In the third quarter, healthcare stocks were a popular addition, probably related to rising confidence in the sector after Democrats won the House in the 2018 mid-term election.
Nearly all of these risings stars had better return rates than the S&P 500; however, just half are outperforming the benchmark in the current quarter.
Below are the 10 "rising suns" that have seen the most new positions added by large-cap funds in the third quarter. They are ranked in ascending order based on the changes in the number of funds that own the stock on a quarterly basis:
10. Simon Property Group
Ticker: SPG
Changes in the number of funds that own the stock: 17
Percentage owned by large-cap funds: 23%
3Q18 relative return to S&P 500: 11.4%
9. Nvidia
Ticker: NVDA
Changes in the number of funds that own the stock: 17
Percentage owned by large-cap funds: 23%
3Q18 relative return to S&P 500: 11.4%
8. Norfolk Southern
Ticker: NSC
Changes in the number of funds that own the stock: 17
Percentage owned by large-cap funds: 16%
3Q18 relative return to S&P 500: 12.4%
7. Medtronic
Ticker: MDT
Changes in the number of funds that own the stock: 17
Percentage owned by large-cap funds: 29%
3Q18 relative return to S&P 500: 7.7%
6. Illumina
Ticker: ILMN
Changes in the number of funds that own the stock: 18
Percentage owned by large-cap funds: 13%
3Q18 relative return to S&P 500: 24.2%
5. CSX
Ticker: CSX
Changes in the number of funds that own the stock: 19
Percentage owned by large-cap funds: 13%
3Q18 relative return to S&P 500: 8.9%
4. Union Pacific
Ticker: UNP
Changes in the number of funds that own the stock: 21
Percentage owned by large-cap funds: 30%
3Q18 relative return to S&P 500: 7.7%
3. WellCare Health Plan
Ticker: WCG
Changes in the number of funds that own the stock: 24
Percentage owned by large-cap funds: 8%
3Q18 relative return to S&P 500: 23%
2. Qualcomm
Ticker: QCOM
Changes in the number of funds that own the stock: 26
Percentage owned by large-cap funds: 25%
3Q18 relative return to S&P 500: 21.2%
1. HCA Healthcare
Ticker: HCA
Changes in the number of funds that own the stock: 26
Percentage owned by large-cap funds: 11%
3Q18 relative return to S&P 500: 28.4%
