"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:

Home Depot (HD)

Market Cap: $379.1 billion

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Why Are We Hesitant About HD?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 33.4%
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 1.5 percentage points

At $381.59 per share, Home Depot trades at 24.3x forward price-to-earnings. To fully understand why you should be careful with HD, check out our full research report (it’s free).

Two Mega-Cap Stocks to Watch:

Amazon (AMZN)

Market Cap: $2.16 trillion

Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ:AMZN) is the world’s largest online retailer and provider of cloud computing services.

Why Are We Positive On AMZN?

1. Amazon revolutionized the way consumers shop. This isn’t the only tailwind to its impressive revenue growth, as its highly profitable AWS segment has also driven top-line momentum.
2. The company's best-in-class revenue growth coupled with modest operating leverage on its past infrastructure investments has led to elite EPS growth over a multi-year period.
3. Though dominant, Amazon's capital-intensive e-commerce business means its profitability is structurally lower than its pure-play tech peers. Can the company pull it up, or are we reaching a ceiling?

Amazon is trading at $205.11 per share, or 32.7x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Eli Lilly (LLY)

Market Cap: $818.3 billion

Founded in 1876, Eli Lilly (NYSE:LLY) is a global pharmaceutical company that develops and produces a wide range of medicines and vaccines for medical conditions such as diabetes, cancer, and mental health disorders.

Why Are We Backing LLY?

1. Market share has increased this cycle as its 25.6% annual revenue growth over the last two years was exceptional
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.7% exceeded its revenue gains over the last five years
3. Industry-leading 27.3% return on capital demonstrates management’s skill in finding high-return investments

Eli Lilly’s stock price of $915.86 implies a valuation ratio of 37.9x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.

Get started by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.