In past recessions, small-cap stocks have traditionally come to the rescue, leading the way back into black. And so far, this one's been no exception, with the Russell 2000 Small-Cap Index seeing a 12.5% gain in comparison to the S&P 500's puny 5%.
Small caps generally tend to outperform large caps, making up for their added risk -- because of their size, small-cap stocks are particularly susceptible to the whims of the market. So when things go sour, they suffer; but when they bounce back, they do it with a vengeance.
However, with economic growth sluggish, and showing no signs of picking up the pace, small caps may be running on empty.
Fortunately for investors, good things don't have to come in small packages. High-quality, stable large caps have managed to return profits to peak levels despite the economy's painfully slow improvement by cutting costs -- an option that smaller companies simply don't have.
And big businesses with strong overseas presence will benefit from the weak dollar, and capitalize on other countries' more rapidly growing economies.
So which large cap stocks should you be considering for your portfolio? You may want to start by looking at the large-cap companies with the most effective management teams.
We've compiled a list of the best large-cap management teams, using the following criteria: five-year average return on equity, measuring how much profit a company earned in comparison to the total amount that shareholders own; return on assets, a metric for a company's profitability relative to its total assets; and return on invested capital, a good indicator of how well a company is using its money to generate returns.
Here's our list of the eight most efficient large cap management teams. If you're looking for quality, large-cap investing ideas, user this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
Management data sourced from Reuters. The list has been sorted by market cap.
|
Company |
Market Cap (in Billions) |
Return on Assets (5-Year Avg.) |
Return on Invested Capital (5-Year Avg.) |
Return on Equity (5-Year Avg.) |
|---|---|---|---|---|
| ExxonMobil (NYSE: XOM) | $338.57 | 16.53% vs. industry avg. of 12.04% | 21.85% vs. industry avg. of 15.02% | 31.94% vs. industry avg. of 20.9% |
| Apple (Nasdaq: AAPL) | $276.09 | 19.96% vs. industry avg. of 7.63% | 28.48% vs. industry avg. of 15.57% | 31.92% vs. industry avg. of 16.99% |
| BHP Billiton (NYSE: BHP) | $229.74 | 17.98% vs. industry avg. of 10.80% | 22.08% vs. industry avg. of 13.52% | 35.02% vs. industry avg. of 16.84% |
| Microsoft (Nasdaq: MSFT) | $228.13 | 21.46% vs. industry avg. of 12.89% | 32.73% vs. industry avg. of 18.66% | 40.00% vs. industry avg. of 21.49% |
| China Mobile (NYSE: CHL) | $206.12 | 16.39% vs. industry avg. of 9.07% | 22.85% vs. industry avg. of 12.11% | 25.17% vs. industry avg. of 16.17% |
| Wal-Mart Stores (NYSE: WMT) | $196.99 | 8.7% vs. industry avg. of 6.57% | 13.58% vs. industry avg. of 10.83% | 21.05% vs. industry avg. of 18.47% |
| The Procter & Gamble (NYSE: PG) | $180.38 | 7.92% vs. industry avg. of 1.44% | 10.06% vs. industry avg. of 1.98% | 17.07% vs. industry avg. of 2.93% |
| Johnson & Johnson (NYSE: JNJ) | $175.57 | 15.41% vs. industry avg. of 9.61% | 20.4% vs. industry avg. of 12.34% | 27.75% vs. industry avg. of 15.91% |
Interactive Chart: Press Play to see how the market caps of these stocks have changed over the last two years.
Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
