"Too big to fail" is how we would describe the megacap stocks in this article today. While they will likely stand the test of time, it’s not all sunshine and rainbows as their scale can limit their ability to find new sources of growth.
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 industry titan with attractive long-term potential and two whose existing offerings may be tapped out.
Two Mega-Cap Stocks to Sell:
Procter & Gamble (PG)
Market Cap: $375.3 billion
Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble (NYSE: PG) is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.
Why Is PG Not Exciting?
- Flat unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Anticipated sales growth of 2.9% for the next year implies demand will be shaky
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3 percentage points
Procter & Gamble is trading at $160.49 per share, or 22.9x forward P/E. If you’re considering PG for your portfolio, see our FREE research report to learn more.
IBM (IBM)
Market Cap: $241.3 billion
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
Why Are We Wary of IBM?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 3.3% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $259.92 per share, IBM trades at 22.9x forward P/E. Dive into our free research report to see why there are better opportunities than IBM.
One Mega-Cap Stock to Buy:
Eli Lilly (LLY)
Market Cap: $682.4 billion
Founded in 1876 by a Civil War veteran and pharmacist frustrated with the poor quality of medicines, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Should You Buy LLY?
- Impressive 34.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Unparalleled scale of $53.26 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Eli Lilly’s stock price of $761.20 implies a valuation ratio of 28.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. 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 Kadant (+351% 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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