While the S&P 500 includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds.
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:
onsemi (ON)
Market Cap: $14.43 billion
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ:ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Are We Cautious About ON?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.8% annually over the last two years
- Projected sales decline of 16.9% over the next 12 months indicates demand will continue deteriorating
- Low free cash flow margin of 10.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
onsemi is trading at $34.62 per share, or 8.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why ON doesn’t pass our bar.
Conagra (CAG)
Market Cap: $11.89 billion
Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE:CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.
Why Do We Pass on CAG?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 7.9 percentage points
At $24.90 per share, Conagra trades at 10.2x forward price-to-earnings. If you’re considering CAG for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Eli Lilly (LLY)
Market Cap: $659.9 billion
Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Will LLY Beat the Market?
- Impressive 25.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Industry-leading 27.3% return on capital demonstrates management’s skill in finding high-return investments
Eli Lilly’s stock price of $821.06 implies a valuation ratio of 30.6x forward price-to-earnings. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.