"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.
This dynamic can trouble even the most skilled investors, but luckily for you, we started StockStory to help you navigate these trade-offs and uncover exceptional companies that break the mold. Keeping that in mind, here are two industry titans with attractive long-term potential and one whose momentum may slow.
One Mega-Cap Stock to Sell:
Tesla (TSLA)
Market Cap: $1.62 trillion
Originally founded by Martin Eberhard and Marc Tarpenning in 2003, Tesla (NASDAQ: TSLA) is an electric vehicle company accelerating the world’s transition to sustainable energy.
Why Do We Avoid TSLA?
- Tesla's scale advantage in EV production leads to gross margins that exceed incumbents such as General Motors and Ford. However, a softer macroeconomic backdrop and tariff pressures have weighed on automobile sales, which are highly cyclical.
- The company's execution ability is a question mark given its long history of delays, such as the Cybertruck and Robotaxi launches. Its sizeable investments in projects with uncertain return timelines, like Optimus, also raise skepticism from investors.
- On the bright side, Tesla's Megapack product solves a critical problem for utilities needing renewable energy storage solutions. This innovation has made the energy segment the most profitable and fastest-growing business line for the company.
Tesla’s stock price of $429.52 implies a valuation ratio of 207.2x forward price-to-earnings. To fully understand why you should be careful with TSLA, check out our full research report (it’s free).
Two Mega-Cap Stocks to Watch:
Micron (MU)
Market Cap: $467 billion
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE: MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Why Are We Bullish on MU?
- Impressive 61.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Projected revenue growth of 103% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 29.2% annually over the last five years and trumped its peers
At $419.57 per share, Micron trades at 11.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
IBM (IBM)
Market Cap: $286.7 billion
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
Why Should IBM Be on Your Watchlist?
- Dominant market position is represented by its $67.54 billion in revenue and gives it fixed cost leverage when sales grow
- Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
IBM is trading at $306.04 per share, or 24.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
