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.
Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. Keeping that in mind, here are two S&P 500 stocks positioned to outperform and one best left off your watchlist.
One Stock to Sell:
Tapestry (TPR)
Market Cap: $14.63 billion
Originally founded as Coach, Tapestry (NYSE:TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Does TPR Fall Short?
- 1.4% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 2.7% for the next 12 months suggests sluggish demand
Tapestry’s stock price of $70.72 implies a valuation ratio of 14.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than TPR.
Two Stocks to Watch:
Paycom (PAYC)
Market Cap: $12.81 billion
Founded in 1998 as one of the first online payroll companies, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Why Do We Like PAYC?
- Superior software functionality and low servicing costs lead to a top-tier gross margin of 84.8%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Excellent operating margin of 33.7% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last year
Paycom is trading at $226 per share, or 6.3x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Centene (CNC)
Market Cap: $29.78 billion
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE:CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Could CNC Be a Winner?
- Annual revenue growth of 15.5% over the last five years beat the sector average and underscores the unique value of its offerings
- Massive revenue base of $169.3 billion gives it meaningful leverage when negotiating reimbursement rates
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 14.8% annually
At $59.20 per share, Centene trades at 7.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.