Devoted to understanding the basics and fundamentals of investing

I am going to be doing an installment periodically where I put together a list of top stocks in each class and give some reasons why I believe they belong in that list. These lists will be on individual stocks and will be done in a manner similar to the top mutual fund lists I started the other day. If you wish to view the top 5 large cap value mutual funds click here. Today I will start with large cap value stocks. These stocks I consider good long-term buy and hold stocks. I have avoided using any stocks from my own personal portfolio so there is no conflict of interest.

1. Conoco Phillips (NYSE: COP)- If you are like me and you do not believe the  surge in oil prices over the last couple of years is just a fad, you will understand this pick. Why Conoco over XOM or others? COP is more leveraged to the price of a barrel of oil, thus benefiting more over the long run if oil goes even higher. The company is buying back large amounts of stock because of a great balance sheet, and Warren Buffett recently added the name to his portfolio.

2. Bank of America (NYSE: BAC)- I completely understand that this company is under some pressure due to the current problems in the lending markets, but remember this is a list for buy and hold stocks, not short-term winners. BAC has a 5.3% dividend yield, highest among the major banks. The company is selling at just 9 times next year's earnings estimates and has higher margins than C, WB, of WFC. The real returns in this large value stock should be quite impressive over the long haul.

3. Hewlett Packard (NYSE: HPQ)- This company has become a common pick of some of the top large cap value funds in the past couple of years. Dodge and Cox Stock Fund (DODGX), which is a mutual fund with a great long-term track record has this as its top pick. HPQ has great management at the company, which has proven itself over the years. The company trades at a PEG ratio of just 1.25 and has been in the process of expanding its margins quickly over the past few quarters.

4. Caterpillar (NYSE: CAT)- Caterpillar is an old value stock that is currently growing at a very impressive pace. The company is the clear leader in its industry, and has a nice looking balance sheet. Though the company has gone up in price over the past few quarters, the price still looks good relative to others in the industry on a valuation basis.

5. Merck (NYSE: MRK)- A company that has proven itself over the years. The stock yields 3%, and the company is in the process of turning itself around again after several years of underperformance. The company still has some great patents, and has the new vaccine Gardasil for HPV, which is the first type of vaccine for this condition. Though the stock may have ups and downs as the pharma sector general does, it should be a good long-term buy and hold.

Always do your own research and simply use this list as a starting point. What do you think of this list? Which companies would you add to the list and which of these would you take off the list?