2 Large-Cap Stocks with Exciting Potential and 1 to Avoid

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. That said, here are two large-cap stocks that still have big upside potential and one whose momentum may slow.

One Large-Cap Stock to Sell:

Northrop Grumman (NOC)

Market Cap: $71 billion

Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE:NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.

Why Is NOC Risky?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Annual earnings per share growth of 1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
3. Eroding returns on capital suggest its historical profit centers are aging

Northrop Grumman is trading at $488.01 per share, or 17.5x forward price-to-earnings. Read our free research report to see why you should think twice about including NOC in your portfolio.

Two Large-Cap Stocks to Watch:

Quanta (PWR)

Market Cap: $39.63 billion

A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.

Why Is PWR a Top Pick?

1. Sales pipeline is in good shape as its backlog averaged 23.8% growth over the past two years
2. Forecasted revenue growth of 13.4% for the next 12 months indicates its momentum over the last two years is sustainable
3. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 18.6% annually

Quanta’s stock price of $265.37 implies a valuation ratio of 25.9x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

ResMed (RMD)

Market Cap: $32.94 billion

Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.

Why Do We Like RMD?

1. Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 17.3% over the last five years outstripped its revenue performance
3. ROIC punches in at 20.8%, illustrating management’s expertise in identifying profitable investments

At $224.74 per share, ResMed trades at 22.9x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking 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 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.