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 two large-cap stocks with attractive long-term potential and one whose momentum may slow.
One Large-Cap Stock to Sell:
Regeneron (REGN)
Market Cap: $71.37 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 Is REGN Not Exciting?
- Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 10.5 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Regeneron is trading at $666.87 per share, or 14.7x forward price-to-earnings. Read our free research report to see why you should think twice about including REGN in your portfolio.
Two Large-Cap Stocks to Watch:
O'Reilly (ORLY)
Market Cap: $76.02 billion
Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.
Why Are We Backing ORLY?
- Comparable store sales rose by 5.4% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Unique assortment of products and pricing power are reflected in its best-in-class gross margin of 51.2%
- Strong free cash flow margin of 12.2% enables it to reinvest or return capital consistently
At $1,323 per share, O'Reilly trades at 29.4x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Hershey (HSY)
Market Cap: $34.45 billion
Best known for its milk chocolate bar and Hershey's Kisses, Hershey (NYSE: HSY) is an iconic company known for its chocolate products.
Why Should HSY Be on Your Watchlist?
- Healthy operating margin of 24.4% shows it’s a well-run company with efficient processes, and its profits increased over the last year as it scaled
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
- Industry-leading 27.7% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
Hershey’s stock price of $169.05 implies a valuation ratio of 23.7x forward price-to-earnings. Is now a good time to buy? Find out in our full 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 Growth Stocks for this month. 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.
