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.
This is precisely where StockStory comes in - our job is to find you high-quality companies that can win regardless of the conditions. That said, here is one large-cap stock whose competitive advantages creates flywheel effects and two that could be stalling.
Two Large-Cap Stocks to Sell:
AT&T (T)
Market Cap: $188.2 billion
Founded by Alexander Graham Bell, AT&T (NYSE:T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Do We Pass on T?
- Products and services aren't resonating with the market as its revenue declined by 7.6% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 10.3% annually, worse than its revenue
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $26.12 per share, AT&T trades at 11.9x forward price-to-earnings. Read our free research report to see why you should think twice about including T in your portfolio.
Cognizant (CTSH)
Market Cap: $41.42 billion
Originally established as an in-house technology unit of Dun & Bradstreet before becoming independent in 1996, Cognizant (NASDAQ:CTSH) is a professional services company that helps businesses modernize their technology, reimagine processes, and transform digital experiences.
Why Do We Steer Clear of CTSH?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Earnings per share lagged its peers over the last two years as they only grew by 3.8% annually
- 8.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Cognizant is trading at $83.74 per share, or 16.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why CTSH doesn’t pass our bar.
One Large-Cap Stock to Watch:
Intuit (INTU)
Market Cap: $167.2 billion
Created in 1983 when founder Scott Cook watched his wife struggle to reconcile the family's checkbook, Intuit provides tax and accounting software for small and medium-sized businesses.
Why Does INTU Stand Out?
- Billings growth has averaged 15% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Robust free cash flow margin of 32.8% gives it many options for capital deployment
Intuit’s stock price of $608.15 implies a valuation ratio of 8.8x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Put yourself in the driver’s seat by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
