3 Large-Cap Stocks That Fall Short

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.

This is precisely where StockStory comes in - our job is to find you high-quality companies that can win regardless of the conditions. Keeping that in mind, here are three large-cap stocks that may face near-term headwinds and some other investments you should consider instead.

Western Digital (WDC)

Market Cap: $39 billion

Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.

Why Do We Think WDC Will Underperform?

1. Annual sales declines of 10.7% for the past five years show its products and services struggled to connect with the market during this cycle
2. Negative 7.7% gross margin means it loses money on every sale and must pivot or scale quickly to survive
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

At $113.40 per share, Western Digital trades at 20x forward P/E. Check out our free in-depth research report to learn more about why WDC doesn’t pass our bar.

Starbucks (SBUX)

Market Cap: $96.95 billion

Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.

Why Do We Think Twice About SBUX?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 5.1 percentage points
3. Performance over the past six years shows its incremental sales were much less profitable, as its earnings per share fell by 2.2% annually

Starbucks is trading at $85.36 per share, or 31.5x forward P/E. If you’re considering SBUX for your portfolio, see our FREE research report to learn more.

BD (BDX)

Market Cap: $53.47 billion

With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE:BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide.

Why Does BDX Give Us Pause?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.5% over the last five years was below our standards for the healthcare sector
2. Free cash flow margin shrank by 10.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Underwhelming 4.5% return on capital reflects management’s difficulties in finding profitable growth opportunities

BD’s stock price of $186.55 implies a valuation ratio of 12.9x forward P/E. Check out our free in-depth research report to learn more about why BDX doesn’t pass our bar.

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 6 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 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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