Large-cap stocks are known for their staying power and ability to weather market storms better than smaller competitors. However, their sheer size makes it more challenging to maintain high growth rates as they’ve already captured significant portions of their markets.
This dynamic can trouble even the most skilled investors, but luckily for you, we started StockStory to help you navigate these trade-offs and uncover exceptional companies that break the mold. Keeping that in mind, here are two large-cap stocks that still have big upside potential and one whose existing offerings may be tapped out.
One Large-Cap Stock to Sell:
Baker Hughes (BKR)
Market Cap: $63.96 billion
Tracing lineage to a 1907 cable tool drill bit patent, Baker Hughes (NASDAQ: BKR) provides equipment and services for oil and gas drilling, production, and transport.
Why Do We Think Twice About BKR?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.8% for the last five years
- Gross margin of 22.1% reflects its high production costs and unfavorable asset base
Baker Hughes is trading at $64 per share, or 25x forward P/E. Dive into our free research report to see why there are better opportunities than BKR.
Two Large-Cap Stocks to Watch:
Amphenol (APH)
Market Cap: $184.6 billion
With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
Why Will APH Outperform?
- Annual revenue growth of 35.6% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 49% annually, topping its revenue gains
- Robust free cash flow margin of 15.7% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
At $150.86 per share, Amphenol trades at 33.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Raymond James (RJF)
Market Cap: $30.24 billion
Founded in 1962 and headquartered in St. Petersburg, Florida, Raymond James Financial (NYSE: RJF) is a diversified financial services company that provides wealth management, investment banking, asset management, and banking services to individuals and institutions.
Why Do We Like RJF?
- 11.6% annual revenue growth over the last five years surpassed the sector average as its products resonated with customers
- Share buybacks propelled its annual earnings per share growth to 16.2%, which outperformed its revenue gains over the last five years
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Raymond James’s stock price of $155.09 implies a valuation ratio of 12.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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