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. That said, here is one large-cap stock whose competitive advantages creates flywheel effects and two whose existing offerings may be tapped out.
Two Large-Cap Stocks to Sell:
Fastenal (FAST)
Market Cap: $52.07 billion
Founded in 1967, Fastenal (NASDAQ: FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Does FAST Worry Us?
- Annual revenue growth of 3.6% over the last two years was below our standards for the industrials sector
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 2.8% annually
- Free cash flow margin shrank by 4.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Fastenal’s stock price of $45.38 implies a valuation ratio of 42.2x forward P/E. Check out our free in-depth research report to learn more about why FAST doesn’t pass our bar.
Northrop Grumman (NOC)
Market Cap: $84.44 billion
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Why Do We Pass on NOC?
- 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
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 5.6 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $591.79 per share, Northrop Grumman trades at 20.8x forward P/E. To fully understand why you should be careful with NOC, check out our full research report (it’s free).
One Large-Cap Stock to Buy:
Cloudflare (NET)
Market Cap: $72.76 billion
Founded by two grad students of Harvard Business School, Cloudflare (NYSE: NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.
Why Is NET a Top Pick?
- Billings growth has averaged 30.3% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Notable projected revenue growth of 26.3% for the next 12 months hints at market share gains
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Cloudflare is trading at $209.17 per share, or 30.5x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
