7 Mega-Cap cooling stocks that you should avoid for now

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I usually like to share great buy stocks or stocks that you have to sell or avoid. It’s a little mixed today.

These are great stocks – some are holdings in the portfolio – but there is simply no time to buy. This means that most of these shares have very low values Portfolio Grader quantitative assessments and intermediate baseline assessments. This tells us that these are not market leaders as they used to be.

But that doesn’t mean there won’t be any more. This simply means that other sectors are gaining more interest and the funds are likely to sell shares of high-profit companies to relocate to new sectors.

However, quality will win and these mega-cap stocks will buy again. There is simply no point in buying them when they may be cheap in a month or two. Keep your powder dry and wait for a better time to move on. And if you own them, just stick to them.

  • Alibaba (NYSE:GRANDMA)
  • Amazon (NASDAQ:AMZN)
  • Disney (NYSE:DIS)
  • PayPal (NASDAQ:PYPL)
  • Visa (NYSE:V)
  • Verizon (NYSE:VZ)
  • Walmart (NYSE:WMT)

Mega-Cap Shares to Avoid: Alibaba (BABA)

Source: Kevin Chen Photography / Shutterstock.com

It is the only Chinese company on the list, so its challenges are somewhat different from other US-based companies.

Earlier this year, the Chinese government surprised investors with a very direct and appalling statement that high-capitalized stocks in China will not have the freedom to expand their business as they wish, especially in the financial markets.

This has caused considerable unrest in world markets and has had a significant freezing effect on high-capitalized Chinese stocks to date.

Markets love predictability. Any unpredictability usually leads to a sale. And that’s what happened here. No one knows whether BABA and other Chinese stocks will remain US-traded stocks, or whether the Chinese government will impose even stricter restrictions on company growth.

BABA shares have lost 46 percent in the last 12 months. And the knife is still falling.

This stock has in my rating F Portfolio Grader.

Amazon.com (AMZN)

Logistics activity in the Amazon city of Vélizy-Villacoublay in France.  Packages are sorted by workers into conneyors.

Source: Frederic Legrand – COMEO / Shutterstock.com

With a market capitalization of nearly $ 1.7 trillion, AMZN is certainly not in any major trouble. But his strong run during the pandemic and mass flight to safe growth after that took AMZN to heaven.

For example, its current price-to-earnings ratio is 64x, well above the Nasdaq 100’s average P / E of 40x. Much of this is the result of its strong performance in 2020 and its continued value for growth and security.

But these types of valuations are no longer sustainable in a transitional market. And this super mega-cap stock has only grown below 3% in the last 12 months. No hurry here.

This stock has in my rating D Portfolio Grader.

Mega-Cap Shares to Avoid: Disney (DIS)

The Legion of Studio Success will continue to strengthen Disney’s stock

Source: Shutterstock

There are some challenges for this iconic mega-cap stock. First, given the spread of the omicron strain – and the new one just discovered in France – its huge resorts and parks around the world are unlikely to be full of capacity. And maybe they’ll be locked up again.

As far as its streaming service is concerned, although the initial growth has been impressive, it is not really as prevalent as many expected or anticipated from the start. And it has important competitors in the space who are very focused only on streaming entertainment and are not as diverse as DIS.

Most surprising is the fact that DIS shares are now traded at a current P / E of 144x. This happens when stocks rise sharply, but earnings do not reflect this optimism. Shares have actually lost 12% in the last 12 months. Awaiting reckoning.

This stock has in my rating D Portfolio Grader.

PayPal (PYPL)

PayPal stock

Source: Michael Vi / Shutterstock.com

Financial technology companies (also called fintech) have been very hot since prison. This was a turning point for established old banks and credit unions. For generations, banks have seen themselves as a conservative service-based company where they have been arbiters of consumer and business needs.

However, when their branches closed, loan and foot traffic revenues dried up. Many financial institutions have had to contend. The slow approach to fintech had to be accelerated and many banks lacked the leadership to get stuck effectively.

Fintech rose. And it was a great opportunity for PYPL, the pioneer of fintech. In the last three years, the PYPL share has risen 122%, up 26% in the last three months. But right now, the problem is the sale. Fintech space is becoming more dynamic and global, which has meant more competition for some leading stocks with high capitalization in the sector.

This stock has in my rating D Portfolio Grader.

Mega-Cap Shares to Avoid: Visa (V)

several Visa (V) credit cards.

Source: Kikinunchi / Shutterstock.com

While V has been around since 1958 and is one of the first credit card companies in the world, it is now a major player in the booming fintech. But what once seemed like a dominant position in the payment sector is now seen as a challenge for its primacy.

V and other payment companies act as intermediaries between merchants and banks. They assume the risk of payment before the bill is paid and confirmed by the bank. For this risk, they take a cut from the merchant and the bank.

But these cuts are dwindling as new competition, which does not have to deal with old systems and overheads, enters markets. And that’s a challenge for V right now.

The stock has been running on water for the past 12 months, after a big hit in 2020. But V has shown its resilience and is already opening new channels in the fintech sector. It’s just not the best choice right now.

This stock has in my rating D Portfolio Grader.

Verizon (VZ)

Verizon (VZ) Wireless logo and brand logo.

Source: Ken Wolter / Shutterstock.com

In the old days, Ma Bell ran American Telecommunications. Then in 1983 he was shattered by an antitrust lawsuit and Baby Bells were born. What we know today as VZ was once Baby Bell, Bell Atlantic. With dominance over much of the East Coast, Verizon had most of the major cities for its customers. And when the wireless connection came along, VZ had a lot of money with which to splurge to expand the wireless network from coast to coast.

VZ crossed an impressive path when it became the leading mobile operator and had a state-of-the-art optical network that also offered internet, entertainment and mobile packages.

But the mobile world has shifted again. And for VZ, the challenge was to maintain primacy in this new world. And because of that, it’s less than a stellar option for now. Of course, its current P / E is only 10x and has a 4.7% dividend yield, but the VZ direction is uncertain.

This stock has in my rating D Portfolio Grader.

Mega-Cap stocks to avoid: Walmart (WMT)

Picture of the Walmart (WMT) logo at the Walmart store with a clear blue sky in the background

Source: Jonathan Weiss / Shutterstock.com

With a market capitalization of nearly $ 400 billion, WMT remains one of the most mega-capped retail stocks in the world. And his ability to catch the wave of e-commerce early on certainly helped when the pandemic hit.

What’s more, WMT also has many stores where customers can easily pick up custom products online. This is a new and important trend in same day service. Walmart Super Stores also have groceries, making them open as an essential service in the event of another closure.

However, WMT is fully evaluated here, with a current P / E of 50x. Remember, this is a low margin business, not a stock of high margin technology. WMT shares have been on the water for the past year and are likely to test their recent lows before moving to new highs.

This stock has in my rating D Portfolio Grader.

On the day of publication, Louis Navellier holds positions in AMZN, DIS, and V in this article. Louis Navellier did not hold (directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace research staff member primarily responsible for this article did not have (directly or indirectly) any position in the securities mentioned in this article.

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