Large-cap stocks usually command their industries because they have the scale to drive market trends. The flip side though is that their sheer size can limit growth as expanding further becomes an increasingly challenging task.
This dynamic can trouble even the most skilled investors, but luckily for you, we started StockStory to help you navigate these trade-offs and uncover exceptional companies that break the mold. That said, here is one large-cap stock that still has big upside potential and two whose existing offerings may be tapped out.
Two Large-Cap Stocks to Sell:
D.R. Horton (DHI)
Market Cap: $40.77 billion
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
Why Is DHI Not Exciting?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 15.5% decline in its backlog
- Earnings per share have dipped by 8.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
D.R. Horton is trading at $137.69 per share, or 12.1x forward P/E. Check out our free in-depth research report to learn more about why DHI doesn’t pass our bar.
State Street (STT)
Market Cap: $31.62 billion
Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE: STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.
Why Are We Cautious About STT?
- 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 3% for the last five years
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 7.3% annually
State Street’s stock price of $113.78 implies a valuation ratio of 10.2x forward P/E. To fully understand why you should be careful with STT, check out our full research report (it’s free for active Edge members).
One Large-Cap Stock to Watch:
ResMed (RMD)
Market Cap: $35.94 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 Does RMD Stand Out?
- Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 14.2% outpaced its revenue gains
- Free cash flow margin jumped by 21.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $244.66 per share, ResMed trades at 22x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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