Stocks can be segregated in numerous different criteria. Firstly, the segregation can be done through industries, enabling an investors to tailor one particular investment approach to overall economic climate and regulatory and governmental incentives which might act as catalysts for sectors including electric vehicles. Another common approach to bifurcate stocks is using their market capitalization and filtering some of the best large cap companies. Market capitalization of the company is the value which is calculated after multiplying total shares outstanding with prevailing market price. It gives an easy way to assess the company’s value in investors’ eyes and its financial health demonstrated by balance sheet.
Few analysts advise to make investment in the stocks on the basis of its market cap, and each and every category of such classifications has own advantages and disadvantages. For best large cap companies, potential to provide high percentage return appears to be greater than mega cap stock. At the same time, relative stability of such companies and their increased stock prices when compared to small and micro caps provide buffer against losses as a result of negative business or economic conditions and stock market scams. Experts believe that large-cap companies have 10x the revenue of small and micro-cap companies, and more than 20x the market capitalization small cap companies.
Therefore, best large cap companies are the most lucrative on equity market in terms of both revenue and market cap. This is unsurprising really since when compared to the 704 large cap stocks being traded on U.S. stock markets, a rather handful of 37 stocks are classified as mega cap stocks.
With this in mind, we will now explore some of the best large cap companies which are expected to see growth as markets regain momentum.
1. Pfizer, Inc.
The company has been categorised as one of the world’s largest pharma company, with annual sales coming ~$50 billion (excluding COVID-19 vaccine sales).
In 3Q23, its revenues came in at $13.2 billion, with expected fall in Paxlovid and Comirnaty revenues resulting in 41% operational fall in 3Q23 revenues. The company was encouraged by strong performance of its non-COVID products in 3Q23, including strong contributions from new launches and healthy year-over-year growth for numerous key in-line brands.
Additionally, the company continues to make progress in its proposed acquisition of Seagen, which has been categorised as a global leader in discovering, developing and commercializing transformative oncology medicines.
During first 9M23, the company invested its capital in several ways, that mainly include: 1) Reinvesting capital in initiatives focused on enhancing future growth prospects, which includes $7.9 billion invested in internal research and development projects, and 2) Returning capital to shareholders in the form of $6.9 billion of cash dividends, or $1.23 per share of common stock.
In FY23, the company expects its revenues to fall in the range of $58.0 billion – $61.0 billion and adjusted diluted EPS of between $1.45 – $1.65.
2. Wells Fargo & Company
It has been categorised as one of the largest banks in the US, with ~$1.9 trillion in balance sheet assets.
The company has released its 3Q23 financial results, with net interest income increasing 8% year-over-year mainly because of the impact of increased interest rates partially offset by lower deposit balances. Non-interest income went up by ~4% year-over-year as a result of increased trading revenue in the company’s Markets business, increased investment banking fees, and higher asset-based fees in Wealth and Investment Management on higher market valuations. This was partially offset by lower mortgage banking income and lesser deposit-related fees.
“In 3Q, the company increased its common stock dividend by ~17% and its CET1 ratio came in at ~11.0%, exhibiting 210 basis points above the company’s new regulatory minimum plus buffers starting in 4Q.
Analysts at UBS Group increased price objective on the shares of the company from $51.00 to $53.00 in the report dated October 12th.
3. S&P Global Inc.
The company gives data and benchmarks to capital and commodity market participants.
In 3Q, its reported revenue went up by 8% and its adjusted revenue, excluding engineering solutions (ES), grew by 11%. Quarterly results of the company demonstrated its ability to adapt to rapidly evolving market conditions and focus on delivering excellent results.
Revenue growth ramped up in every division. It continues to invest in innovation, as proved by multiple product launches in 3Q, and the company continues to demonstrate disciplined execution on expenses. Revenue went up by ~8% and its adjusted revenue excluding Engineering Solutions grew by ~11%, as a result of acceleration across divisions. Revenue from subscription products went up by ~9%, excluding Engineering Solutions.
Reported operating profit margin saw a growth of ~5 percentage points to ~34.8%, mainly because of increase in GAAP revenue. Adjusted operating profit margin went up by ~100 basis points to 47% mainly because of divestiture of Engineering Solutions, growth in Ratings division, and strong expense management.
For FY23 (on GAAP basis), the company expects revenue growth of 10% – 12% and operating profit margin of 34.5% – 35.5%. Diluted EPS is expected between $8.75 – $8.90 and capital expenditures are expected to be ~$145 million.
Allspring Global Investments Holdings LLC upped its holdings in the company by ~43.5% in 2Q, as per recent filing to its most recent Form 13F filing released with SEC. Apart from this, Ridgewood Investments LLC acquired new position in the shares of the company in 1Q worth ~$28,000.
Raymond James reduced their price objective on shares of the company from $421.00 to $403.00, giving an “outperform” rating on the stock in the report dated October 5th.
Conclusion
While above are some of the best large cap companies which are expected to perform well as soon as market recovers, there are several other companies with strong balance sheet which can outperform market indexes.
As per the data compiled by Stock Analysis, as of early November 2023, there were ~704 best large cap companies which are trading on the US exchanges. Cumulatively, these companies have market cap of ~$29 trillion, with total revenue of ~$16.36 trillion.
Read Also: