Large-cap stocks are known for their staying power and ability to weather market storms better than smaller competitors. However, their sheer size makes it more challenging to maintain high growth rates as they’ve already captured significant portions of their markets.
This is precisely where StockStory comes in - our job is to find you high-quality companies that can win regardless of the conditions. Keeping that in mind, here is one large-cap stock with attractive long-term potential and two whose existing offerings may be tapped out.
Two Large-Cap Stocks to Sell:
Kraft Heinz (KHC)
Market Cap: $33.72 billion
The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ: KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Why Is KHC Risky?
- Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Sales are projected to tank by 1.6% over the next 12 months as demand evaporates further
- Efficiency has decreased over the last year as its operating margin fell by 11.2 percentage points
Kraft Heinz is trading at $28.54 per share, or 10.6x forward P/E. Check out our free in-depth research report to learn more about why KHC doesn’t pass our bar.
Sherwin-Williams (SHW)
Market Cap: $88.42 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Are We Wary of SHW?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 2.5% for the next year implies demand will be shaky
- 8.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $353.57 per share, Sherwin-Williams trades at 28.8x forward P/E. Dive into our free research report to see why there are better opportunities than SHW.
One Large-Cap Stock to Buy:
O'Reilly (ORLY)
Market Cap: $77.68 billion
Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.
Why Should You Buy ORLY?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.5% growth over the past two years
- Collection of products is difficult to replicate at scale and leads to a best-in-class gross margin of 51.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
O'Reilly’s stock price of $1,359 implies a valuation ratio of 29.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
