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 that could be stalling.
One Large-Cap Stock to Sell:
FedEx (FDX)
Market Cap: $87.07 billion
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE: FDX) is a global provider of parcel and cargo delivery services.
Why Are We Out on FDX?
- 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 2.5% for the last two years
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
FedEx is trading at $365.87 per share, or 17.6x forward P/E. Dive into our free research report to see why there are better opportunities than FDX.
Two Large-Cap Stocks to Buy:
Airbnb (ABNB)
Market Cap: $82.44 billion
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
Why Is ABNB a Top Pick?
- Nights and Experiences Booked are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Healthy EBITDA margin of 35.7% shows it’s a well-run company with efficient processes
- Strong free cash flow margin of 39% enables it to reinvest or return capital consistently
Airbnb’s stock price of $137.80 implies a valuation ratio of 15.2x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
ADP (ADP)
Market Cap: $79.29 billion
Processing one out of every six paychecks in the United States, ADP (NASDAQ: ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
Why Is ADP a Good Business?
- Annual revenue growth of 7.8% over the last five years beat the sector average and underscores the unique value of its offerings
- ADP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
- Returns on capital are growing as management capitalizes on its market opportunities
At $197.00 per share, ADP trades at 17x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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