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Smart home company SmartRent (NYSE:SMRT) missed Wall Street’s revenue expectations in Q4 CY2024, with sales falling 41.3% year on year to $35.37 million. Its GAAP loss of $0.06 per share was $0.03 below analysts’ consensus estimates.

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.

Companies that consistently increase their sales, margins, or returns on capital are usually rewarded with the best returns, and those that can do all three for years on end are almost always the legendary stocks that return 100 times your money.

The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

Software is eating the world, and virtually no business is left untouched by it. Companies bringing it to life have been rewarded with explosive earnings growth, and the upward trend shows no signs of stopping as the industry has posted a 18.1% gain over the past six months, beating the S&P 500 by 12.8 percentage points.

"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.