“Too big to fail” is how we would describe the megacap stocks in this article today. While they will likely stand the test of time, it’s not all sunshine and rainbows as their scale can limit their ability to find new sources of growth.
Sound complicated? With StockStory, it doesn’t have to be. Our job is to find you high-quality companies that can win regardless of the conditions. Keeping that in mind, here are three industry titans whose existing offerings may be tapped out and some other investments you should look into instead.
Market Cap: $228.4 billion
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE:CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Why Are We Hesitant About CRM?
Underwhelming ARR growth of 9% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
Estimated sales growth of 8.9% for the next 12 months is soft and implies weaker demand
Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
At $240.40 per share, Salesforce trades at 5.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CRM.
Market Cap: $270.1 billion
Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE:WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.
Why Are We Cautious About WFC?
Sizable revenue base leads to growth challenges as its 2.8% annual net interest income increases over the last five years fell short of other banking companies
Estimated net interest income growth of 5.3% for the next 12 months is soft and implies weaker demand
Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 45.3 basis points (100 basis points = 1 percentage point)
Wells Fargo is trading at $86.10 per share, or 1.6x forward P/B. Read our free research report to see why you should think twice about including WFC in your portfolio, it’s free for active Edge members.
Market Cap: $682.1 billion
Starting as a database company in 1977 and now powering mission-critical systems across the globe, Oracle (NYSE:ORCL) provides enterprise software and hardware products and services that help businesses manage their information technology needs.
