Large-cap stocks usually command their industries because they have the scale to drive market trends. The flip side though is that their sheer size can limit growth as expanding further becomes an increasingly challenging task.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you find high-quality companies that can grow their earnings no matter what. That said, here is one large-cap stock that still has big upside potential and two that could be stalling.
Two Large-Cap Stocks to Sell:
Republic Services (RSG)
Market Cap: $62.66 billion
Processing several million tons of recyclables annually, Republic (NYSE: RSG) provides waste management services for residences, companies, and municipalities.
Why Does RSG Worry Us?
- The company has faced growth challenges as its 4.7% annual revenue increases over the last two years fell short of other industrials companies
- Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.3%
At $203.50 per share, Republic Services trades at 27.1x forward P/E. Read our free research report to see why you should think twice about including RSG in your portfolio.
Keysight (KEYS)
Market Cap: $61.94 billion
Spun off from Hewlett-Packard in 2014, Keysight (NYSE: KEYS) offers electronic measurement products for use in various sectors.
Why Does KEYS Give Us Pause?
- Muted 3.1% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Earnings per share have contracted by 2.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Waning returns on capital imply its previous profit engines are losing steam
Keysight’s stock price of $362.22 implies a valuation ratio of 39.4x forward P/E. Dive into our free research report to see why there are better opportunities than KEYS.
One Large-Cap Stock to Watch:
Cigna (CI)
Market Cap: $79.55 billion
With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE: CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.
Why Does CI Stand Out?
- Solid 16.1% annual revenue growth over the last two years indicates its offering’s solve complex business issues
- Massive revenue base of $277.7 billion gives it meaningful leverage when negotiating reimbursement rates
- Earnings per share have comfortably outperformed the peer group average over the last five years, increasing by 10.9% annually
Cigna is trading at $301.95 per share, or 9.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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