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5 $100 Billion Stocks Not Worth a Dime of Your Money

Sometimes, companies are just too big to grow

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stockstockart 5 $100 Billion Stocks Not Worth a Dime of Your MoneyWhy on earth would anyone want to buy a stock of a company with a market capitalization of more than $100 billion? While it is true large companies can crush the competition and dominate markets, growth often is elusive once you reach that size.

Given that future profits in the stock market are a function of profit growth, owning a $100 billion stock makes little sense. It is far better to go small. Think about it. A company that is making $10 million in profits needs to improve by $2 million per year to reach 20% profit growth. A large company with 10 billion in profits needs to add $2 billion per year to match that growth.

Do you realize how difficult it is to add $2 billion in new profits in a given year? Trust me. It is difficult. As such, I would avoid these five $100 billion companies. They might look like attractive stocks, but they are not. They are just the opposite — and not worth a dime of your money.


Article printed from InvestorPlace Media, http://investorplace.com/2011/08/100-billion-stocks-worthless/.

©2014 InvestorPlace Media, LLC

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