The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here is one S&P 500 stock that is positioned to outperform and two that may struggle.
Two Stocks to Sell:
Brown-Forman (BF.B)
Market Cap: $12.88 billion
Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE:BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.
Why Does BF.B Fall Short?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales decline of 3.6% for the next 12 months points to an even tougher demand environment ahead
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6 percentage points
Brown-Forman’s stock price of $27.40 implies a valuation ratio of 16.6x forward P/E. Check out our free in-depth research report to learn more about why BF.B doesn’t pass our bar.
United Rentals (URI)
Market Cap: $54.37 billion
Owning the largest rental fleet in the world, United Rentals (NYSE:URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Are We Wary of URI?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.1% annually
- Free cash flow margin shrank by 5.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
United Rentals is trading at $857 per share, or 18.9x forward P/E. Dive into our free research report to see why there are better opportunities than URI.
One Stock to Watch:
ResMed (RMD)
Market Cap: $36.51 billion
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Are We Positive On RMD?
- Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 9.4% over the past two years
- Additional sales over the last five years increased its profitability as the 14.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 21.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $250.25 per share, ResMed trades at 22.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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