Tickers in this Article: HPQ, BP, DELL, MSFT
Large caps are often viewed as your stable, slow growth dividend paying stocks that your grandparents own. The combination of a consistent dividend payout along with a slowly advancing stock price appeals to ultra conservative investors. Those looking for growth often fish for smaller companies hoping to ride them to a larger cap status. Thanks to today's roller coaster market, some large caps offer the best of both: safety in size and great growth potential.

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Profit from Turmoil
Hewlett Packard (NYSE:HPQ) shares offers a significant upside potential over the next couple of years. After some corporate mishaps that led to the replacement of the CEO, the company value is not reflected in the current share price. Trading at $27 today, shares are trading at six times forward earnings. Both Dell (Nasdaq:DELL) and Microsoft (Nasdaq:MSFT) are considered undervalued businesses in their own right, and trade at significantly higher valuations. More so, those earnings are likely to excel in the coming years as the company refocuses itself on its highly profitable businesses. HP's significant free cash flow generation of nearly $8 billion a year also creates a lot of share buyback and dividend possibilities. (For related reading, see Free Cash Flow: Free, But Not Always Easy.)

Gain from Pain
Another large cap dealing with some pain is oil giant BP (NYSE:BP). Uncertainty over oil spill liabilities left the company trading at 6.5 times forward earnings and a P/B ratio of 1.2, a significant valuation discount to its peers. Chevron (NYSE:CVX), widely considered a high quality stock is trading at an attractive price that sells for 8 times forward earnings and a P/B ratio of 1.7. The market hates uncertainty but just as ExxonMobil (NYSE:XOM) survived a massive oil spill and went on to thrive, so will BP. Unfortunately, oil spills are consequences of oil production. BP generates a ton of cash flow and strong oil prices will continue to fuel cash flow growth.

The Bottom Line
Both HP and BP suffer from problems that can be fixed. Buying shares on sale of a quality company facing temporary problems can often lead to a huge payoff. The only skill needed is a little patience.

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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

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