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 are two S&P 500 stocks positioned to outperform and one that may struggle.
One Stock to Sell:
AT&T (T)
Market Cap: $198.6 billion
Founded by Alexander Graham Bell, AT&T (NYSE:T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Do We Avoid T?
- Products and services have few die-hard fans as sales have declined by 6.7% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 9% annually, worse than its revenue declines
- Projected 2.1 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
AT&T is trading at $27.83 per share, or 12.8x forward P/E. Dive into our free research report to see why there are better opportunities than T.
Two Stocks to Watch:
AutoZone (AZO)
Market Cap: $67.1 billion
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE:AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
Why Should You Buy AZO?
- Store expansion strategy is justified by its healthy same-store sales
- Unique assortment of products and pricing power lead to a best-in-class gross margin of 51.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $4,011 per share, AutoZone trades at 24.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Ross Stores (ROST)
Market Cap: $46.38 billion
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Why Does ROST Stand Out?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Comparable store sales rose by 3.5% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- ROIC punches in at 28.3%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
Ross Stores’s stock price of $142.39 implies a valuation ratio of 21.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
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