Megacap stocks dominate their sectors and their actions influence economies worldwide. The flip side though is that their sheer size means they have less room for explosive growth as scale works against them.
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 industry titans whose competitive advantages create flywheel effects and one whose momentum may slow.
One Mega-Cap Stock to Sell:
Tesla (TSLA)
Market Cap: $994.3 billion
Originally founded by Martin Eberhard and Marc Tarpenning in 2003, Tesla (NASDAQ: TSLA) is an electric vehicle company accelerating the world’s transition to sustainable energy.
Why Do We Steer Clear of TSLA?
- Tesla's scale advantage in EV production leads to gross margins that exceed incumbents such as General Motors and Ford. However, a softer macroeconomic backdrop and tariff pressures have weighed on automobile sales, which are highly cyclical.
- The company's execution ability is a question mark given its long history of delays, such as the Cybertruck and Robotaxi launches. Its sizeable investments in projects with uncertain return timelines, like Optimus, also raise skepticism from investors.
- On the bright side, Tesla's Megapack product solves a critical problem for utilities needing renewable energy storage solutions. This innovation has made the energy segment the most profitable and fastest-growing business line for the company.
At $306.90 per share, Tesla trades at 146.5x forward price-to-earnings. Check out our free in-depth research report to learn more about why TSLA doesn’t pass our bar.
Two Mega-Cap Stocks to Watch:
Nvidia (NVDA)
Market Cap: $4.34 trillion
Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ: NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.
Why Will NVDA Outperform?
- Annual revenue growth of 140% over the past two years was outstanding, reflecting market share gains this cycle
- Share buybacks catapulted its annual earnings per share growth to 80.2%, which outperformed its revenue gains over the last five years
- Strong free cash flow margin of 48.8% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
Nvidia’s stock price of $176.69 implies a valuation ratio of 37.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Coca-Cola (KO)
Market Cap: $292.2 billion
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE: KO) is a storied beverage company best known for its flagship soda.
Why Does KO Stand Out?
- Enormous revenue base of $47.23 billion provides significant negotiating leverage in retail partnerships
- Products command premium prices and lead to a best-in-class gross margin of 61.1%
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.1%, and its profits increased over the last year as it scaled
Coca-Cola is trading at $68.01 per share, or 21.9x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2024, 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 ServiceNow (+178% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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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