Large-cap stocks are some of the largest corporations on the planet. Many of these stocks are household names that offer investors more safety than small and mid-cap stocks.
While these stocks tend to have less volatility, there are a few exceptions to this rule. Large-cap stocks also have their fair share of risks. Getting a better picture of household names and their value propositions can help you decide which ones are worth buying.
Unfortunately, not all large-cap stocks make for compelling long-term investments. Some investments remain flat for years or even result in net losses after several years. These are some of the large-cap stocks you may want to trim or eliminate from your portfolio before things get worse.
Large-Cap Stocks to Dump: Disney (DIS)
Disney (NYSE:DIS) has sourly disappointed investors in recent years, leading to a lost decade in the process. Stashing your money in a checking account in March 2014 would have generated higher returns than buying Disney stock at the same time.
Disney has endured key flops in recent years. The flops indicate how much creativity Disney has lost over the years, as the busts in this list are from iconic franchises like Marvel or remakes of classic animated films like The Little Mermaid.
Marvel fatigue continues to grow, and that’s horrendous news considering how profitable Marvel was for Disney in the previous decade. The story doesn’t seem to be a happy ending, with Disney+ losing 11.7 million subscribers.
Disney+ has been a money pit for the company, and recent efforts to raise prices can lead to a larger exodus among its members. Disney leans on nostalgia from previous films to bring people to theme parks and increase merchandise sales.
While a turnaround isn’t completely out of the cards, I wouldn’t bet my money on it.
Nike (NKE)
Nike (NYSE:NKE) has run into a wall, with shares down by 23% year-to-date. The decline has resulted in an unimpressive five-year gain of 7%. Nike has generated year-over-year net income declines for several quarters, and the trend has plenty of momentum behind it.
Rising retail theft has hurt the company’s financials. The company even offered to pay police officers to guard its Portland store from shoplifters.
Rising crime is one of several factors hampering the stock. Nike also faces pressure due to an inventory glut that is forcing them to lower prices to get rid of excess products. That means lower prices which hurts the company’s revenue and profit margins.
Nike is an iconic household name, but it’s not immune to economic forces. Revenue only increased by 5% year-over-year in the fiscal fourth quarter. Net income faced a worse fate and plunged by 28% year-over-year.
Inflation is back, the Fed is committing to keeping interest rates firm with some hikes, and consumers are getting more defensive with their spending. None of these developments spell good news for Nike investors.
Snowflake (SNOW)
Snowflake (NYSE:SNOW) has been a broken IPO featured by a 37% decline since going public. Shares are up by 10% year-to-date, but investors may benefit from taking a cautious approach with this stock.
The cloud computing company has 639 of the Forbes Global 2000 as customers and has more than 400 customers that have generated more than $1 million for the company. Net revenue retention currently sits at 142%.
These positive attributes get completely overshadowed by high net losses, decelerating revenue and a valuation that must be seen to be believed.
Snowflake reported 36% year-over-year revenue growth in the second quarter of fiscal 2024. It’s a deceleration from the 48% revenue growth in FY Q1 2024, 53% revenue growth in FY Q4 2023, and 67% revenue growth in FY Q3 2023.
Snowflake made it out of the second fiscal quarter of 2024 with a GAAP net loss of $226 million. These aren’t good numbers for any company, and a 278 forward P/E ratio is another reason for investors to rush for the exits. Snowflake isn’t the best stock for long-term portfolios at this time, especially with better choices available.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
