Economics
Runaway Valuation Risk No Barrier to Megacap Stock Obsession
- P/S ratios of biggest stocks at 13-year high vs. small caps
- Sales growth in big caps has slowed in 7 of 10 industries
Large-Cap Stocks Holding Up Better Than Small-Caps
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A rift is emerging in the U.S. stock market between companies whose sales are expanding and those whose aren’t. So far, investors prefer the latter.
Revenue at the biggest U.S. companies is in retreat even as prices hover near all-time highs, making large-cap shares the most expensive in more than a decade, measured against sales. The Russell 1000 Index, which tracks the largest stocks by market value, trades for 1.8 times sales, compared with a ratio of 1.2 in the Russell 2000 Index of small-caps, the widest gap since 2003.