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.
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 may struggle.
Two Stocks to Sell:
Stanley Black & Decker (SWK)
Market Cap: $10.12 billion
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE: SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Do We Steer Clear of SWK?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 11% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.7 percentage points
Stanley Black & Decker is trading at $65.51 per share, or 12.2x forward P/E. Dive into our free research report to see why there are better opportunities than SWK.
CoStar (CSGP)
Market Cap: $31.03 billion
With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ: CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.
Why Does CSGP Fall Short?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 23.6 percentage points
- Earnings per share fell by 4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 23.7 percentage points
At $72.82 per share, CoStar trades at 69.2x forward P/E. If you’re considering CSGP for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Tractor Supply (TSCO)
Market Cap: $25.66 billion
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ: TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Why Are We Positive On TSCO?
- Rapidly increasing store base reflects a desire to sell in new markets and scale quickly
- Estimated revenue growth of 5.6% for the next 12 months implies its momentum over the last six years will continue
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Tractor Supply’s stock price of $48.63 implies a valuation ratio of 21.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
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.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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.
