The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that may struggle.
Two Stocks to Sell:
Textron (TXT)
Market Cap: $13.27 billion
Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Why Are We Hesitant About TXT?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.2% for the last five years
- Estimated sales growth of 3.8% for the next 12 months is soft and implies weaker demand
- Free cash flow margin dropped by 3.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Textron’s stock price of $77.14 implies a valuation ratio of 11.4x forward P/E. If you’re considering TXT for your portfolio, see our FREE research report to learn more.
Verizon (VZ)
Market Cap: $191 billion
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE: VZ) is a telecom giant providing a range of communications and internet services.
Why Do We Think VZ Will Underperform?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last five years
- Free cash flow margin is anticipated to expand by 1.3 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $45.99 per share, Verizon trades at 9x forward P/E. Check out our free in-depth research report to learn more about why VZ doesn’t pass our bar.
One Stock to Watch:
American Express (AXP)
Market Cap: $204 billion
Recognizable by its iconic green logo and the slogan "Don't leave home without it," American Express (NYSE: AXP) is a global payments company that issues credit and charge cards, processes merchant transactions, and offers travel and lifestyle benefits to consumers and businesses.
Why Does AXP Catch Our Eye?
- Solid 13.2% annual revenue growth over the last five years indicates its offerings solve complex business issues
- Earnings per share grew by 13.9% annually over the last five years, above the peer group average
- Industry-leading 33% return on equity demonstrates management’s skill in finding high-return investments
American Express is trading at $302.09 per share, or 16.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
