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.
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 two large-cap stocks with attractive long-term potential and one whose momentum may slow.
Market Cap: $87.79 billion
Tracing its roots back to 1784 when it was founded by Alexander Hamilton, BNY (NYSE:BK) is a global financial institution that provides asset servicing, wealth management, and investment services to institutions, corporations, and high-net-worth individuals.
Why Are We Cautious About BK?
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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 4.7% for the last five years
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Annual tangible book value per share growth of 3.2% over the last five years lagged behind its financials peers as its large balance sheet made it difficult to generate incremental capital growth
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Below-average return on equity indicates management struggled to find compelling investment opportunities
BNY is trading at $127.88 per share, or 15.2x forward P/E. Check out our free in-depth research report to learn more about why BK doesn’t pass our bar.
Market Cap: $37.29 billion
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Is DDOG a Good Business?
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Customers view its software as mission-critical to their operations as its ARR has averaged 27.6% growth over the last year
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Prominent and differentiated software leads to a premier gross margin of 80%
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Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $105.87 per share, Datadog trades at 9.7x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
Market Cap: $112.7 billion
One of two remaining major hard drive manufacturers after decades of industry consolidation, Seagate (NASDAQ:STX) manufactures hard disk drives and solid state drives that store data in data centers, cloud systems, and consumer devices.
