Three US large-cap stocks that promise outsized returns
The fundamental long-term outlook for high-quality US large-cap stocks remains positive, says professional investor Timothy Parton of the JPMorgan American Investment Trust. Here, he picks three of his favourites.
As the world remains gripped by the pandemic and the presidential election draws near, many investors are struggling to see beyond immediate economic and political uncertainty. Nevertheless, the fundamental long-term outlook for high-quality US large-cap stocks remains positive.
Many of the themes that dominated the US market before the pandemic remain evident today: growth is still outperforming value, tech is rallying and financials are being left behind. As stockpickers, we continue to focus on individual quality companies that we think can weather the economic storm, however long it may last.
That means looking beyond immediate market noise and having conviction in firms with good management who are committed to strong balance sheets, while also finding opportunities that are out of favour in the current climate.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Qualcomm: mobile chips look tasty
Next-generation technology has been one of the biggest stories in US markets for 2020. Over the last six months, we have added to our holding in technology firm Qualcomm (Nasdaq: QCOM), which specialises in intellectual property, semiconductors, software and wireless technology services.
Not only are Qualcomm’s fundamentals strong, but we also see a promising long-term outlook as we move towards 5G infrastructure globally. The semiconductor company is often overlooked owing to its historical dependence on mobile-handset growth. But the initial deployment of 5G networks has started to show through in Qualcomm’s results this year and this is a trend we believe is in the early innings. So, we think the best is yet to come at the world’s largest mobile chipmaker.
Amazon: the clear leader in online retail
Online sales comprised just 1% of overall retail sales in 2000. By 2019, this figure had reached 11%, with e-commerce outpacing the overall market by 15% over the past five years. The pandemic has accelerated the trend: Mastercard’s data shows us that since the outbreak of Covid-19, e-commerce has come to comprise 22% of retail sales.
Yet in the US market, the top-ten online retailers account for 60% of sales. We continue to trust in Amazon (Nasdaq: AMZN), which remains the clear leader in this sector. It is seven times larger than its nearest competitor, Walmart, and has built a strong distribution system. Furthermore, the business is seeing huge growth in its cloud business, both through its own systems and thanks to providing cloud technology to other big tech names, such as Netflix.
PayPal : the preferred payment processor
While the US financials have been out of the limelight this year, we believe there are huge opportunities here, particularly beyond the core banks. While many financial-services firms are struggling in the low interest-rate environment, technology-enabled companies, such as those in the payments sector, are set to grow strongly. PayPal Holdings (Nasdaq: PYPL) is at the intersection of e-commerce and digital payments.
For many of us, our first awareness of PayPal is when we are purchasing items on eBay, but today PayPal has leveraged its first-mover advantage to become the preferred and trusted payment-processor for e-commerce. It is accepted by over 20 million merchants and has 300 million active users. The company delivers robust organic growth.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Timothy Parton is investment manager of the JPMorgan American Investment Trust
-
Is a mortgage in retirement always a bad idea?
A mystery shopper exercise shows high street lenders are “shunning” retirees looking to take out a mortgage. Are they right to do so?
-
Three funds to consider as UK small caps trade at 30% discount
UK small caps have been unloved for some time, but a shifting economic environment could give them a boost
-
Investment opportunities in the world of Coca-Cola
There is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?
Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
Trainline: a cheap cash machine for investors
Opinion Trainline’s shares have slumped owing to concerns about growth, but the sell-off seems overdone
-
Look to British stocks to lead the charge as the Magnificent Seven falter
Opinion Gervais Williams, fund manager, The Diverse Income Trust, picks three British stocks where he'd put his money
-
'Pension funds shouldn't be pushed into private equity sector'
Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throne
Greg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?
Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?
Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.