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.
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. That said, here is one large-cap stock with attractive long-term potential and two whose momentum may slow.
Two Large-Cap Stocks to Sell:
Rockwell Automation (ROK)
Market Cap: $33.23 billion
One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.
Why Do We Think ROK Will Underperform?
- 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
- Sales were less profitable over the last two years as its earnings per share fell by 8% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $294.53 per share, Rockwell Automation trades at 29.5x forward P/E. Check out our free in-depth research report to learn more about why ROK doesn’t pass our bar.
Otis (OTIS)
Market Cap: $38.28 billion
Credited with inventing the first hydraulic passenger elevator, Otis Worldwide (NYSE: OTIS) is an elevator and escalator manufacturing, installation and service company.
Why Does OTIS Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales growth of 3.9% for the next 12 months suggests sluggish demand
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.8 percentage points
Otis’s stock price of $97 implies a valuation ratio of 23.2x forward P/E. If you’re considering OTIS for your portfolio, see our FREE research report to learn more.
One Large-Cap Stock to Buy:
Zscaler (ZS)
Market Cap: $36.06 billion
After successfully selling all four of his previous cybersecurity companies, Jay Chaudhry's fifth venture, Zscaler (NASDAQ: ZS) offers software-as-a-service that helps companies securely connect to applications and networks in the cloud.
Why Are We Bullish on ZS?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Estimated revenue growth of 19.7% for the next 12 months implies its momentum over the last three years will continue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Zscaler is trading at $232.45 per share, or 12.4x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
