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 are three large-cap stocks that may face near-term headwinds and some other investments you should consider instead.
Adobe (ADBE)
Market Cap: $147.1 billion
Originally named after Adobe Creek that ran behind co-founder John Warnock's house, Adobe (NASDAQ: ADBE) develops software products used for digital content creation, document management, and marketing solutions across desktop, mobile, and cloud platforms.
Why Are We Wary of ADBE?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 11.6% underwhelmed
- Estimated sales growth of 9% for the next 12 months implies demand will slow from its two-year trend
- Operating margin expanded by 5.1 percentage points over the last year as it scaled and became more efficient
Adobe is trading at $352.71 per share, or 5.9x forward price-to-sales. Check out our free in-depth research report to learn more about why ADBE doesn’t pass our bar.
General Motors (GM)
Market Cap: $56.52 billion
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Does GM Worry Us?
- Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.9 percentage points
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $59.70 per share, General Motors trades at 6.6x forward P/E. Read our free research report to see why you should think twice about including GM in your portfolio.
Ford (F)
Market Cap: $48.63 billion
Established to make automobiles accessible to a broader segment of the population, Ford (NYSE: F) designs, manufactures, and sells a variety of automobiles, trucks, and electric vehicles.
Why Should You Sell F?
- Flat vehicles sold over the past two years imply it may need to invest in improvements to get back on track
- Diminishing returns on capital suggest its earlier profit pools are drying up
- High net-debt-to-EBITDA ratio of 9× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Ford’s stock price of $12.28 implies a valuation ratio of 9.4x forward P/E. To fully understand why you should be careful with F, check out our full research report (it’s free).
Stocks We Like More
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 Growth Stocks for this month. 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 Comfort Systems (+782% 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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