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.

Sound complicated? With StockStory, it doesn’t have to be. Our job is to find you high-quality companies that can win regardless of the conditions. Keeping that in mind, here is one industry titan that still has big upside potential and two that could be stalling.

Two Mega-Cap Stocks to Sell:

Home Depot (HD)

Market Cap: $375.4 billion

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Do We Think Twice About HD?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its six-year trend
3. Free cash flow margin shrank by 2.5 percentage points over the last year, suggesting the company is consuming more capital to stay competitive

Home Depot’s stock price of $377 implies a valuation ratio of 24.6x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio.

Cisco (CSCO)

Market Cap: $269.1 billion

Founded in 1984 by a husband and wife team who wanted computers at Stanford to talk to computers at UC Berkeley, Cisco (NASDAQ: CSCO) designs and sells networking equipment, security solutions, and collaboration tools that help businesses connect their systems and secure their digital operations.

Why Does CSCO Worry Us?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points
3. Waning returns on capital imply its previous profit engines are losing steam

Cisco is trading at $67.96 per share, or 17.4x forward P/E. To fully understand why you should be careful with CSCO, check out our full research report (it’s free).

One Mega-Cap Stock to Buy:

Netflix (NFLX)

Market Cap: $496.6 billion

Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.

Why Are We Bullish on NFLX?

1. Global Streaming Paid Memberships have grown by 13.9% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
2. Share repurchases over the last three years enabled its annual earnings per share growth of 27.8% to outpace its revenue gains
3. Free cash flow margin expanded by 19.9 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends

At $1,168 per share, Netflix trades at 33.7x forward EV/EBITDA. Is now the time to initiate a position? 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 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-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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