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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here are two S&P 500 stocks positioned to outperform and one that could be in trouble.
Market Cap: $30.45 billion
The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ:KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Why Are We Out on KHC?
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Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
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Forecasted revenue decline of 1.6% for the upcoming 12 months implies demand will fall off a cliff
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Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 11.2 percentage points
At $25.80 per share, Kraft Heinz trades at 9.6x forward P/E. Dive into our free research report to see why there are better opportunities than KHC.
Market Cap: $49.73 billion
One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.
Why Do We Like PAYX?
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Estimated revenue growth of 18.7% for the next 12 months implies demand will accelerate from its three-year trend
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Highly efficient business model is illustrated by its impressive 39.6% operating margin
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PAYX is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Paychex’s stock price of $139.35 implies a valuation ratio of 7.6x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Market Cap: $33.2 billion
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
Why Are We Backing DXCM?
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Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 19.2% over the past two years
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Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 23.2% outpaced its revenue gains
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Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures