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 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: $122.5 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 Does ADI Worry Us?
- Annual sales declines of 10.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Efficiency has decreased over the last five years as its operating margin fell by 7 percentage points
- Underwhelming 6.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
Analog Devices’s stock price of $248.95 implies a valuation ratio of 29.4x forward P/E. If you’re considering ADI for your portfolio, see our FREE research report to learn more.
Royal Caribbean (RCL)
Market Cap: $95.36 billion
Established in 1968, Royal Caribbean Cruises (NYSE: RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.
Why Does RCL Fall Short?
- Sluggish trends in its passenger cruise days suggest customers aren’t adopting its solutions as quickly as the company hoped
- Estimated sales growth of 9.5% for the next 12 months implies demand will slow from its two-year trend
- Low returns on capital reflect management’s struggle to allocate funds effectively
Royal Caribbean is trading at $352.22 per share, or 21.1x forward P/E. Check out our free in-depth research report to learn more about why RCL doesn’t pass our bar.
D.R. Horton (DHI)
Market Cap: $54.87 billion
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
Why Are We Hesitant About DHI?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 17% declines over the past two years
- Earnings per share have dipped by 5.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
At $184.33 per share, D.R. Horton trades at 15.6x forward P/E. To fully understand why you should be careful with DHI, check out 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 5 Strong Momentum 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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