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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.
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 is one large-cap stock with attractive long-term potential and two that could be stalling.
Two Large-Cap Stocks to Sell:
Live Nation (LYV)
Market Cap: $34.23 billion
Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.
Why Does LYV Fall Short?
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Demand for its offerings was relatively low as its number of events has underwhelmed
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Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability
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Free cash flow margin is forecasted to shrink by 1.9 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Live Nation is trading at $142 per share, or 63x forward P/E. To fully understand why you should be careful with LYV, check out our full research report (it’s free).
Boeing (BA)
Market Cap: $155.2 billion
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE:BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Do We Think BA Will Underperform?
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Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
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Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
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Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Boeing’s stock price of $202.85 implies a valuation ratio of 29.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BA in your portfolio, it’s free.
One Large-Cap Stock to Watch:
United Rentals (URI)
Market Cap: $47.17 billion
Owning the largest rental fleet in the world, United Rentals (NYSE:URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Could URI Be a Winner?
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Annual revenue growth of 12.1% over the last two years was superb and indicates its market share increased during this cycle
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Healthy operating margin of 25.6% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
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Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue