Since the beginning of 2024, the U.S. stock market has continued to strengthen, driven by improving macroeconomic expectations. As of February 18, the S&P 500, Nasdaq, and Dow Jones indices have recorded increases of 3.96%, 3.71%, and 4.71%, respectively. However, what’s more noteworthy is that a group of leading companies with market capitalizations exceeding $10 billion and solid performance and valuations are quietly reaching historical highs. These companies, bolstered by strong profit growth and high recognition from institutional investors, have become the core carriers of the current structural market trend.

（Source: uSMART HK）

Market Differentiation Is Intensifying, with Quality Assets Becoming Stronger

Despite the overall robust performance of the U.S. stock market, there is an increasingly evident trend of capital concentrating on top companies. According to the latest data, among the top 20 companies with market capitalizations over $10 billion and year-on-year growth in earnings per share (EPS), nearly 80% have outperformed the market since the beginning of the year, with some companies' stock prices even surpassing historical peaks. For example, streaming giant Netflix (NFLX) saw its stock price reach a high of $1,035 due to better-than-expected growth in paid subscribers; Meta (META) benefited from the recovery of its advertising business and the implementation of AI technology, regaining a market capitalization of $1.8 trillion.

From an industry perspective, these 20 companies span diverse sectors, including technology (META, NFLX), finance (JPM, ICE), consumer goods (WMT, K), and utilities (ETR), indicating that profit improvement is not limited to a single industry but is supported by broad economic resilience. Notably, the technology and consumer sectors account for 55%, confirming that these two areas remain the core engines driving growth in the U.S. stock market.

High Growth + Low Valuation: the Underlying Logic of Institutional Investment

Analyzing the financial metrics of the top 20 companies reveals two common traits: significant improvement in profitability and relatively reasonable valuations. For instance, cybersecurity company Fortinet (FTNT) has an EPS growth rate of 55.14%, yet its dynamic price-to-earnings (P/E) ratio is only 50 times, significantly lower than the industry average. Meanwhile, financial data service provider Intercontinental Exchange (ICE), with a market cap of over $95 billion, maintains a P/E ratio of 34.82, highlighting its value-for-money advantage.

Of particular interest is that several companies exhibit the "Davis Double Play" characteristic—achieving both profit expansion and valuation enhancement. In the financial sector, New York Mellon Bank (BK) achieved a 45.95% year-on-year EPS growth, with its P/E ratio rising from 12 times at the beginning of the year to 15.34 times; industrial waste management company Republic Services (RSG) improved its profit margins through mergers and acquisitions, driving its stock price up by 23% this year.

Institutional Ratings Reveal Fund Preferences

According to ratings from Wall Street analysts, 14 of these 20 companies have received "Strong Buy" or "Buy" ratings, reflecting professional institutions' recognition of their long-term value. JPMorgan (JPM) has received target price upgrades from several investment banks due to improved net interest margins and a recovery in investment banking; Walmart (WMT) has been selected as a defensive allocation favorite thanks to its complete retail transformation and growth in subscription income.

However, the market remains divided on some high-valuation stocks. For example, despite a staggering 108% year-on-year EPS growth for big data service provider Palantir (PLTR), its P/E ratio of 660 has sparked valuation controversy, leading to mixed analyst ratings of "Neutral" and "Buy." Energy company Entergy (ETR) has shown profit improvements but faces cautious outlooks from institutions due to industry transformation pressures.

For ordinary investors, these companies hitting historical highs represent not only core market assets but also imply short-term volatility risks. It’s important to note that current U.S. stock valuations are nearing historical highs, with the S&P 500's forward P/E ratio reaching 21 times. Investors should be alert to the adjustment pressures resulting from fluctuating interest rate policies. It is recommended to participate in this structural market trend through gradual stock accumulation and industry diversification, with a focus on companies that provide better-than-expected earnings guidance during the March earnings season.

Historical experience shows that companies capable of continuously reaching new highs often possess irreplaceable competitive advantages. In an environment of macroeconomic uncertainty, these large-cap leaders, backed by solid performance growth and institutional funding, may continue to lead market trends. However, for ordinary investors, it is crucial to deeply examine the fundamental performance and valuation alignment of companies while chasing hot stocks to seize genuine value opportunities amid volatility.

How to Trade on uSMART

After logging into the uSMART HK APP, click on the search icon at the top right of the screen. Enter the stock code, such as "META.US" to access detailed information, trading history, and trends. Click the “Trade” button at the bottom right, select the “Buy/Sell” function, and submit your order after filling in the transaction conditions.

（Source: uSMART HK）