2 Large-Cap Stocks to Keep an Eye On and 1 Facing Headwinds
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 are two large-cap stocks whose competitive advantages create flywheel effects and one that could be stalling.
One Large-Cap Stock to Sell:
Lockheed Martin (LMT)
Market Cap: $123.6 billion
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE:LMT) specializes in defense, space, homeland security, and information technology products.
Why Do We Steer Clear of LMT?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.9% for the last five years
- Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Lockheed Martin is trading at $536 per share, or 17.3x forward P/E. Dive into our free research report to see why there are better opportunities than LMT.
Two Large-Cap Stocks to Watch:
Wabtec (WAB)
Market Cap: $47.87 billion
Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE:WAB) provides equipment, systems, and related software for the railway industry.
Why Is WAB a Good Business?
- Operating margin expanded by 4 percentage points over the last five years as it scaled and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 18.1%, which outperformed its revenue gains over the last two years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
At $283.41 per share, Wabtec trades at 24.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Pfizer (PFE)
Market Cap: $158.1 billion
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Do We Like PFE?
- Massive revenue base of $63.7 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Adjusted operating profits increased over the last two years as the company gained some leverage on its fixed costs and became more efficient
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Pfizer’s stock price of $27.77 implies a valuation ratio of 10x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.