Large-cap stocks are known for their staying power and ability to weather market storms better than smaller competitors. However, their sheer size makes it more challenging to maintain high growth rates as they’ve already captured significant portions of their markets.
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 three large-cap stocks whose existing offerings may be tapped out and some other investments you should look into instead.
Analog Devices (ADI)
Market Cap: $104.4 billion
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Is ADI Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 12.7% annually over the last two years
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.3 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $209.51 per share, Analog Devices trades at 26.8x forward P/E. Check out our free in-depth research report to learn more about why ADI doesn’t pass our bar.
Illinois Tool Works (ITW)
Market Cap: $70.95 billion
Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE: ITW) manufactures engineered components and specialized equipment for numerous industries.
Why Are We Cautious About ITW?
- 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
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.4%
- Free cash flow margin dropped by 1.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Illinois Tool Works’s stock price of $241.84 implies a valuation ratio of 23.2x forward P/E. Read our free research report to see why you should think twice about including ITW in your portfolio.
General Motors (GM)
Market Cap: $46.81 billion
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Are We Wary of GM?
- Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
- Projected sales decline of 5.5% for the next 12 months points to a tough demand environment ahead
- Gross margin of 12.5% reflects its high production costs
General Motors is trading at $48.69 per share, or 4.5x forward P/E. If you’re considering GM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
