2 Mega-Cap Stocks to Keep an Eye On and 1 We Find Risky

"Too big to fail" is how we would describe the megacap stocks in this article today. While they will likely stand the test of time, it’s not all sunshine and rainbows as their scale can limit their ability to find new sources of growth.

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 two industry titans with attractive long-term potential and one whose momentum may slow.

One Mega-Cap Stock to Sell:

Disney (DIS)

Market Cap: $203.1 billion

Founded by brothers Walt and Roy, Disney (NYSE:DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.

Why Are We Out on DIS?

1. Annual sales growth of 3.8% over the last two years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
2. Projected 4 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
3. ROIC of 6.6% reflects management’s challenges in identifying attractive investment opportunities

Disney’s stock price of $112.98 implies a valuation ratio of 18.8x forward P/E. Read our free research report to see why you should think twice about including DIS in your portfolio.

Two Mega-Cap Stocks to Watch:

Meta (META)

Market Cap: $1.80 trillion

Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.

Why Will META Beat the Market?

1. Customer spending is rising as the company has focused on monetization over the last two years, leading to 14.5% annual growth in its average revenue per user
2. Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Robust free cash flow margin of 29.2% gives it many options for capital deployment

Meta is trading at $718.78 per share, or 15.4x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

AMD (AMD)

Market Cap: $266.2 billion

Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.

Why Are We Positive On AMD?

1. Market share has increased this cycle as its 31.1% annual revenue growth over the last five years was exceptional
2. Projected revenue growth of 22.4% for the next 12 months is above its two-year trend, pointing to accelerating demand
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 32% annually

At $164.14 per share, AMD trades at 32.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Exlservice (+354% 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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