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. That said, here are two S&P 500 stocks positioned to outperform and one that could be in trouble.
One Stock to Sell:
Starbucks (SBUX)
Market Cap: $107 billion
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Does SBUX Give Us Pause?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Estimated sales growth of 4.4% for the next 12 months implies demand will slow from its six-year trend
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.6 percentage points
Starbucks’s stock price of $94.39 implies a valuation ratio of 29.8x forward P/E. Check out our free in-depth research report to learn more about why SBUX doesn’t pass our bar.
Two Stocks to Watch:
Philip Morris (PM)
Market Cap: $273.8 billion
Founded in 1847, Philip Morris International (NYSE: PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.
Why Is PM a Top Pick?
- Products are seeing elevated demand as its unit sales averaged 3% growth over the past two years
- Unique products and pricing power lead to a best-in-class gross margin of 64.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
Philip Morris is trading at $176.54 per share, or 23.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Humana (HUM)
Market Cap: $29.42 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 Are We Fans of HUM?
- 12.2% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Unparalleled scale of $120.2 billion in revenue enables it to spread administrative costs across a larger membership base
- Projected revenue growth of 6.2% for the next 12 months suggests its momentum from the last two years will persist
At $244.01 per share, Humana trades at 16.3x 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
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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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-micro-cap company Tecnoglass (+1,754% 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
