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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you find high-quality companies that can grow their earnings no matter what. Keeping that in mind, here is one large-cap stock that still has big upside potential and two whose momentum may slow.
Two Large-Cap Stocks to Sell:
RTX (RTX)
Market Cap: $194.9 billion
Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.
Why Are We Cautious About RTX?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.3% for the last five years
- Earnings per share were flat while its revenue grew over the last five years, partly because it issued new shares
- ROIC of 2.5% reflects management’s challenges in identifying attractive investment opportunities
RTX’s stock price of $146.37 implies a valuation ratio of 23.3x forward P/E. Check out our free in-depth research report to learn more about why RTX doesn’t pass our bar.
Pfizer (PFE)
Market Cap: $135.8 billion
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Do We Think Twice About PFE?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin shrank by 8.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $23.92 per share, Pfizer trades at 8x forward P/E. Read our free research report to see why you should think twice about including PFE in your portfolio.
One Large-Cap Stock to Watch:
Paychex (PAYX)
Market Cap: $54.14 billion
One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.
Why Could PAYX Be a Winner?
- Estimated revenue growth of 17.9% for the next 12 months implies demand will accelerate from its three-year trend
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 41.5%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Paychex is trading at $150.01 per share, or 8.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today