While the S&P 500 (^GSPC) 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. Keeping that in mind, here are two S&P 500 stocks positioned to outperform and one that could be in trouble.
Market Cap: $217.9 billion
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE:TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Do We Think Twice About TMO?
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Sales stagnated over the last two years and signal the need for new growth strategies
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Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
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Efficiency has decreased over the last five years as its adjusted operating margin fell by 9.2 percentage points
Thermo Fisher’s stock price of $578.20 implies a valuation ratio of 23.9x forward P/E. Dive into our free research report to see why there are better opportunities than TMO.
Market Cap: $65.34 billion
Widely regarded as the face of crypto, Coinbase (NASDAQ:COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Why Is COIN on Our Radar?
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Monthly Transacting Users have grown by 11.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
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Switching costs of its platform were on full display over the last two years as it not only grew engagement but also increased the average revenue per user by 55% annually
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Platform is difficult to replicate at scale and leads to a best-in-class gross margin of 85.9%
Coinbase is trading at $241.41 per share, or 19x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Market Cap: $17.35 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?
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Excellent operating margin of 17.2% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last five years
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Share repurchases over the last two years enabled its annual earnings per share growth of 18.3% to outpace its revenue gains
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Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures