The S&P 500 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. That said, here is one S&P 500 stock that could deliver good returns and two that could be in trouble.
Two Stocks to Sell:
Darden (DRI)
Market Cap: $24.03 billion
Founded in 1968 as Red Lobster, Darden (NYSE: DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Are We Wary of DRI?
- Annual sales growth of 5.7% over the last six years lagged behind its restaurant peers as its large revenue base made it difficult to generate incremental demand
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 21.3%
Darden is trading at $202.21 per share, or 20.1x forward price-to-earnings. Check out our free in-depth research report to learn more about why DRI doesn’t pass our bar.
Charter (CHTR)
Market Cap: $52.4 billion
Operating as Spectrum, Charter (NASDAQ: CHTR) is a leading telecommunications company offering cable television, high-speed internet, and voice services across the United States.
Why Is CHTR Risky?
- Demand for its offerings was relatively low as its number of internet subscribers has underwhelmed
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $368.73 per share, Charter trades at 10.4x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than CHTR.
One Stock to Watch:
Cardinal Health (CAH)
Market Cap: $32.96 billion
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE: CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Do We Like CAH?
- Massive revenue base of $222.3 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Projected revenue growth of 6.2% over the next 12 months is higher than most peers
- Earnings per share grew by 7.1% annually over the last five years and topped the peer group average
Cardinal Health’s stock price of $136.60 implies a valuation ratio of 16.5x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
