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 whose competitive advantages creates flywheel effects and two that could be stalling.
Two Large-Cap Stocks to Sell:
Cummins (CMI)
Market Cap: $54.9 billion
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.
Why Is CMI Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.3% over the last two years was below our standards for the industrials sector
- Free cash flow margin dropped by 6.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Cummins is trading at $398.44 per share, or 19.5x forward P/E. If you’re considering CMI for your portfolio, see our FREE research report to learn more.
Lockheed Martin (LMT)
Market Cap: $106.4 billion
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE:LMT) specializes in defense, space, homeland security, and information technology products.
Why Is LMT Risky?
- Backlog growth averaged a weak 7.3% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 4.9% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
Lockheed Martin’s stock price of $455.88 implies a valuation ratio of 16.1x forward P/E. To fully understand why you should be careful with LMT, check out our full research report (it’s free).
One Large-Cap Stock to Watch:
TJX (TJX)
Market Cap: $152 billion
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
Why Is TJX Interesting?
- Same-store sales growth averaged 4.1% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Enormous revenue base of $57.93 billion compensates for its low gross margin and provides significant leverage in supplier negotiations
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are climbing as it finds even more attractive growth opportunities
At $136.55 per share, TJX trades at 29.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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
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