3 Large-Cap Stocks We Keep Off Our Radar

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.

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 three large-cap stocks whose existing offerings may be tapped out and some other investments you should look into instead.

PACCAR (PCAR)

Market Cap: $58.09 billion

Founded more than a century ago, PACCAR (NASDAQ:PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.

Why Does PCAR Fall Short?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 11.4% annually over the last two years
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Eroding returns on capital suggest its historical profit centers are aging

At $110.40 per share, PACCAR trades at 18.8x forward P/E. Read our free research report to see why you should think twice about including PCAR in your portfolio.

Fifth Third Bancorp (FITB)

Market Cap: $45.25 billion

Named after the merger of Third National Bank and Fifth National Bank in 1908, Fifth Third Bancorp (NASDAQ:FITB) is a financial services company that provides banking, lending, wealth management, and investment services to individuals and businesses across the Midwest and Southeast.

Why Are We Hesitant About FITB?

1. 6.5% annual net interest income growth over the last five years was slower than its banking peers
2. Performance over the past two years shows its incremental sales were less profitable, as its 2.8% annual earnings per share growth trailed its revenue gains
3. Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years

Fifth Third Bancorp is trading at $49.78 per share, or 1.3x forward P/B. If you’re considering FITB for your portfolio, see our FREE research report to learn more.

Rocket Companies (RKT)

Market Cap: $41.06 billion

Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE:RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.

Why Does RKT Worry Us?

1. Sales tumbled by 15% annually over the last five years, showing market trends are working against it during this cycle
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 39.8% annually, worse than its revenue
3. Low return on equity reflects management’s struggle to allocate funds effectively

Rocket Companies’s stock price of $14.52 implies a valuation ratio of 1.7x forward P/B. Check out our free in-depth research report to learn more about why RKT doesn’t pass our bar.

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