1 S&P 500 Stock on Our Watchlist and 2 Facing Challenges
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 is leading the market forward and two that could be in trouble.
Two Stocks to Sell:
News Corp (NWSA)
Market Cap: $14.86 billion
Established in 2013 after a restructuring, News Corp (NASDAQ:NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Should You Dump NWSA?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
At $25.82 per share, News Corp trades at 21x forward P/E. Check out our free in-depth research report to learn more about why NWSA doesn’t pass our bar.
General Motors (GM)
Market Cap: $70.55 billion
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Does GM Fall Short?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.8% for the last two years
- High input costs result in an inferior gross margin of 12.2% that must be offset through higher volumes
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 5.8 percentage points
General Motors is trading at $78.40 per share, or 6.2x forward P/E. Dive into our free research report to see why there are better opportunities than GM.
One Stock to Watch:
Lennox (LII)
Market Cap: $16.68 billion
Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Why Could LII Be a Winner?
- Operating margin expanded by 5.2 percentage points over the last five years as it scaled and became more efficient
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROIC punches in at 39.2%, illustrating management’s expertise in identifying profitable investments
Lennox’s stock price of $479.75 implies a valuation ratio of 20.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
