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.

Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that could be in trouble.

Two Stocks to Sell:

Estée Lauder (EL)

Market Cap: $31.85 billion

Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.

Why Is EL Not Exciting?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Poor expense management has led to an operating margin of -0.7% that is below the industry average
3. Performance over the past three years was negatively impacted by new share issuances as its earnings per share dropped by 16.5% annually, worse than its revenue

Estée Lauder is trading at $84.60 per share, or 27.3x forward P/E. Read our free research report to see why you should think twice about including EL in your portfolio.

Kroger (KR)

Market Cap: $39.28 billion

With a sprawling network of over 2,400 locations offering digital pickup services, Kroger (NYSE: KR) operates supermarkets, pharmacies, and fuel centers across 35 states, offering customers groceries, household items, and private-label products.

Why Do We Think KR Will Underperform?

1. Limited expansion of stores suggests it’s prioritizing efficiency over growth at this stage
2. Gross margin of 23.9% is an output of its commoditized inventory
3. Performance over the past three years shows each sale was less profitable, as its earnings per share fell by 20.9% annually

At $56.78 per share, Kroger trades at 11.5x forward P/E. Check out our free in-depth research report to learn more about why KR doesn’t pass our bar.

One Stock to Buy:

Humana (HUM)

Market Cap: $44.27 billion

With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.

Why Is HUM a Top Pick?

1. Solid 13.6% annual revenue growth over the last two years indicates its offerings solve complex business issues
2. Unparalleled scale of $137.3 billion in revenue enables it to spread administrative costs across a larger membership base
3. Market share is on track to rise over the next 12 months as its 19.4% projected revenue growth implies demand will accelerate from its two-year trend

Humana’s stock price of $360.00 implies a valuation ratio of 34.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.