1 Large-Cap Stock to Consider Right Now and 2 We Avoid
Large-cap stocks usually command their industries because they have the scale to drive market trends. The flip side though is that their sheer size can limit growth as expanding further becomes an increasingly challenging task.
This dynamic can trouble even the most skilled investors, but luckily for you, we started StockStory to help you navigate these trade-offs and uncover exceptional companies that break the mold. That said, here is one large-cap stock that still has big upside potential and two whose existing offerings may be tapped out.
Two Large-Cap Stocks to Sell:
Twilio (TWLO)
Market Cap: $33.12 billion
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE:TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Are We Wary of TWLO?
- Customers generally do not adopt complementary products as its 110% net revenue retention rate lags behind the industry standard
- Sky-high servicing costs result in an inferior gross margin of 48.7% that must be offset through increased usage
- Operating margin improvement of 4.3 percentage points over the last year demonstrates its ability to scale efficiently
At $217.37 per share, Twilio trades at 5.7x forward price-to-sales. Check out our free in-depth research report to learn more about why TWLO doesn’t pass our bar.
Sherwin-Williams (SHW)
Market Cap: $80.67 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE:SHW) is a manufacturer of paints, coatings, and related products.
Why Does SHW Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.1% over the last two years was below our standards for the industrials sector
- Estimated sales growth of 4.3% for the next 12 months is soft and implies weaker demand
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5% annually
Sherwin-Williams’s stock price of $328.37 implies a valuation ratio of 28.1x forward P/E. Read our free research report to see why you should think twice about including SHW in your portfolio.
One Large-Cap Stock to Watch:
Western Digital (WDC)
Market Cap: $191.5 billion
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Could WDC Be a Winner?
- Projected revenue growth of 43.7% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Operating margin expansion of 17.3 percentage points over the last five years shows the company optimized its expenses
- Free cash flow margin jumped by 17.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Western Digital is trading at $544.48 per share, or 36x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.