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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Are these the best large cap stocks to watch in February 2024?

What are the best large cap shares to watch in February 2024? These shares have been selected for recent market news.

Best large cap stocks to watch in February 2024 Source: Bloomberg

Large capitalisation stocks are companies with a market capitalisation of around more than £1 billion. In the UK, these tend to be listed in the FTSE 100, in the US, the S&P 500. A company’s market capitalisation or value is its share price multiplied by the number of shares in issue.

Typically, companies with a large market capitalisation tend to be more mature and therefore more stable investments than smaller firms. The shares can also be easier to buy and sell because the investments are more liquid. This means that buyers and sellers of these stocks are more readily available than they may be for smaller, less liquid stocks, which it may be harder to make a market in.

That said, even large companies can fail – take for example Debenhams and Credit Suisse - so it’s important to do your own research.

Here are some of the large stocks we think may be worth watching in February 2024. These have been chosen for recent market news.

Past performance is not an indicator of future returns.

Best large cap shares to watch

1. IAG

2. Diageo

3. Sage

4. Imperial Brands

5. Tesco

IAG (LON: IAG)

The airline and holiday sectors continue to get back to normal following the Covid pandemic. International Airlines Group (IAG) owns British Airways, Air Lingus, Vueling and Iberia. It enjoyed record third quarter results, posted in October, with operating profits before exceptional items of €1.7 billion (2022: €1.2 billion) and operating operating margins improving to 20.2% (16.6% in 2022).

What’s more, the company said it expects the full year 2023 to be “a year of strong recovery in our margins, operating profit and balance sheet and towards pre-COVID-19 levels of capacity.” Thanks to strong demand for leisure travel, passenger unit revenue rose by 2.2% year-on-year.

Capacity increased by 17.9% on last year (now representing 95.6% of third quarter capacity in 2019), with 20 new aircraft delivered. Fuel costs have fallen by 6.2% and IAG has also repaid a €2.4 billion chunk of its €17.2 billion debts over the period.

The company is seeing strong demand across all its routes, particularly in the North and South Atlantic and in Europe. Of course, potential risks include the wars in Gaza and the Ukraine.

The stock trades on a price earnings ratio of just 5. The shares are up 23% over the past 12 months but are still trading some way from their five-year highs and at 144p could have further distance to travel.

Source: Bloomberg

Diageo (LON: DGE)

Drinks giant Diageo has had a rough year, with the sudden death of its longstanding chief executive Ivan Menezes and the poor performance of its Latin American and Caribbean (LAC) business. The company, which owns brands including Johnny Walker, Smirnoff, Don Julio and Bailey’s, issued a profit warning in November, revealing that a drop in sales in the LAC division would reduce net organic sales by 20% in the first half of 2024. The business accounts for 11% of the group’s net sales value.

The company says it now expects organic operating profit growth for the first half of 2024 to decline compared to the previous year. As such, the shares have fallen 22% to 2805p. However, this weakness could represent a long-term buying opportunity for what is a quality company.

While the LAC business is being hit by falling consumption and consumers buying cheaper brands due to economic pressures, this is also set against strong comparative numbers in the previous year. What’s more, the company’s other regions are still performing well, with momentum strong in Europe and the Middle East, despite the Israel/Hama conflict in Gaza and the Ukraine war, strong sales in Africa, Asia Pacific and North America.

Over time, Diageo still expects organic net sales growth to come of between 5% and 7% over the medium term, driven by its international spirits business. Analysts at broker Citigroup think the shares could reach 3050p.

Sage Group (LON: SGE)

The financial software firm Sage Group recently completed its transformation into a cloud computing company. Given the current tough economic environment, many small and medium-sized companies may be looking to save money by using Sage’s products. Recent full year revenues increased by 12% to £2.2 billion (from £1.9 billion last year), although pre-tax profits fell by 16% to £282 million (£337 million in 2022) due to restructuring and merger and acquisition-related costs.

However, underlying recurring revenues are growing strongly, up 12% to £2.1 billion, with recurring cloud native solution revenues up 34% to £596 million and cloud connected solutions sales up 21% to £1 billion. Sales are particularly buoyant in North America, where the economy remains strong. What’s more, the company is also returning £350 million to shareholders through a share buyback programme.

Management also expect operating margins to improve this year, although organic revenue growth will remain flat. The shares have risen by 56% this year to 1,173p but analysts at broker Bank of America and Citigroup think they could reach 1,300p.

Source: Bloomberg

Imperial Brands (LON: IMB)

Tobacco investments are not to everyone’s taste. However, these companies tend to generate a lot of cash, which can have attractions for income seekers. Indeed, Imperial Brands is returning the equivalent of £2.4 billion to investors in 2024 in dividends and share buybacks – 15% of its market capitalisation in November, according to the company.

The shares are down 8% this year, however, to 1,890p and currently trade on a price earnings ratio of just 7. This is due to worries about slowing growth in the tobacco market and regulator concerns about the safety of new vaping products.

Nevertheless, full year revenues for 2023 remained stable at £32.5 billion (£32.6 billion in 2022), while pre-tax profits increased to £3 billion (from £2.6 billion last year) due to cost cuts. Three out of five of Imperials main markets also saw growth during the period and growth is expected from the company’s vaping products.

Tesco (LON: TSCO)

Tesco shares have had a strong run this year and are up 21% to 296.9p but remain worth watching. So far, the supermarket giant has been seen to hold a winning formula in the battle for customers amid the ongoing cost of living crisis. In October, the company returned to profit for the half-year and saw like-for-like sales rise by 7.8%. What's more, its recent Christmas trading statement was strong, with like-for-like UK sales in the four weeks to Christmas up 9.2%.

As such, the retailer has increased its profit forecast for the year to adjusted operating profits of £2.75 billion for its retail business, up from previous forecasts of £2.6 billion-£2.7billion. The company is also returning £750 million to shareholders via a share buyback scheme.

Shares dipped, however, following the release of the figures. Some analysts fear the competition authorities could look into its Clubcard scheme and whether it is anticompetitive, while the Unite Union has also accused Tesco of "profiteering" during the cost of living crisis.

Analysts at broker Barclays have a price target of 335p on the shares, which trade on a price earnings ratio of around 15 and yield 3.6%.

How to invest or trade in large cap shares with us

1. Learn more about large cap shares
2. Open an account with us or practise on a demo
3. Select your opportunity
4. Choose your position size and manage your risk
5. Place your deal and monitor your trade

You can either invest in shares directly or trade using spread betting or CFDs to benefit from leverage.

Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

Learn more about the differences between trading and investing here.

Top large cap shares to watch summed up

The above five companies are just a small selection of top stocks to watch among the large capitalised companies. Remember that big companies can also fail and always do your own research.

Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.

*Based on revenue excluding FX (published financial statements, October 2021).


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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