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 dynamic can trouble even the most skilled investors, but luckily for you, we started StockStory to help you navigate these trade-offs and uncover exceptional companies that break the mold. Keeping that in mind, here are two large-cap stocks that still have big upside potential and one whose existing offerings may be tapped out.
One Large-Cap Stock to Sell:
Illinois Tool Works (ITW)
Market Cap: $77.48 billion
Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE:ITW) manufactures engineered components and specialized equipment for numerous industries.
Why Is ITW Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Forecasted revenue decline of 1% for the upcoming 12 months implies demand will fall off a cliff
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.6 percentage points
Illinois Tool Works’s stock price of $263.98 implies a valuation ratio of 24.8x forward price-to-earnings. Read our free research report to see why you should think twice about including ITW in your portfolio.
Two Large-Cap Stocks to Buy:
Reddit (RDDT)
Market Cap: $29.27 billion
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Should You Buy RDDT?
- Has the opportunity to boost monetization through new features and premium offerings as its domestic daily active visitors have grown by 31.7% annually over the last two years
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 80.5% annually
- Free cash flow margin grew by 43.9 percentage points over the last four years, giving the company more chips to play with
At $164.50 per share, Reddit trades at 62.1x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Cencora (COR)
Market Cap: $49.17 billion
The result of the 2001 merger between AmeriSource Health and Bergen Brunswig, Cencora (NYSE:COR) supplies pharmaceuticals and healthcare services to hospitals, pharmacies, clinics, and other facilities.
Why Will COR Beat the Market?
- Unparalleled scale of $303.2 billion in revenue enables it to spread administrative costs across a larger membership base
- Share repurchases over the last five years enabled its annual earnings per share growth of 14.4% to outpace its revenue gains
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Cencora is trading at $253.54 per share, or 16.3x forward price-to-earnings. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.
Get started 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
