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.
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.
Market Cap: $48.92 billion
Starting with AutoCAD in the 1980s and evolving into a comprehensive design ecosystem, Autodesk (NASDAQ:ADSK) provides software solutions for architecture, engineering, construction, manufacturing, and entertainment industries to design, simulate, and visualize projects.
Why Do We Think Twice About ADSK?
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Annual revenue growth of 13.5% over the last five years was below our standards for the software sector
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Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
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Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
Autodesk is trading at $232.04 per share, or 6.2x forward price-to-sales. To fully understand why you should be careful with ADSK, check out our full research report (it’s free).
Market Cap: $53.29 billion
Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Are We Hesitant About FAST?
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Muted 5.7% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
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Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.4% annually
At $46.15 per share, Fastenal trades at 37.3x forward P/E. If you’re considering FAST for your portfolio, see our FREE research report to learn more.
Market Cap: $147 billion
Starting with just three people selling snowboards online in 2004, Shopify (NYSE:SHOP) provides a comprehensive platform that enables merchants of all sizes to create, manage and grow their businesses across multiple sales channels.
Why Will SHOP Beat the Market?
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Winning new contracts that can potentially increase in value as its billings growth has averaged 30.7% over the last year
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Notable projected revenue growth of 26.9% for the next 12 months hints at market share gains
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User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
