Large-cap stocks have the power to shape entire industries thanks to their size and widespread influence. With such vast footprints, however, finding new areas for growth is much harder than for smaller, more agile players.
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 are three large-cap stocks that may face near-term headwinds and some other investments you should consider instead.
Microchip Technology (MCHP)
Market Cap: $38.06 billion
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Do We Think MCHP Will Underperform?
- Annual sales declines of 3.6% for the past five years show its products and services struggled to connect with the market during this cycle
- Operating margin declined by 11.6 percentage points over the last five years as its sales cratered
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 16 percentage points
Microchip Technology is trading at $70.53 per share, or 62.5x forward P/E. Dive into our free research report to see why there are better opportunities than MCHP.
Danaher (DHR)
Market Cap: $145.3 billion
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Why Does DHR Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.9% annually over the last two years
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- 7.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $203 per share, Danaher trades at 25.1x forward P/E. Read our free research report to see why you should think twice about including DHR in your portfolio.
Regeneron (REGN)
Market Cap: $59.03 billion
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ: REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Does REGN Give Us Pause?
- 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 6.7% for the last two years
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 12.3 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Regeneron’s stock price of $558.67 implies a valuation ratio of 14x forward P/E. If you’re considering REGN for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
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