The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here is one S&P 500 stock that could deliver good returns and two that may struggle.
Two Stocks to Sell:
Dover (DOV)
Market Cap: $25.1 billion
A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE: DOV) manufactures engineered components and specialized equipment for numerous industries.
Why Do We Steer Clear of DOV?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings per share lagged its peers over the last two years as they only grew by 2.2% annually
- Free cash flow margin dropped by 3.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Dover’s stock price of $183.04 implies a valuation ratio of 19.3x forward P/E. To fully understand why you should be careful with DOV, check out our full research report (it’s free).
Thermo Fisher (TMO)
Market Cap: $155.6 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 Are We Cautious About TMO?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 10 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $412 per share, Thermo Fisher trades at 17.4x forward P/E. Dive into our free research report to see why there are better opportunities than TMO.
One Stock to Watch:
Altria (MO)
Market Cap: $99.03 billion
Best known for its Marlboro brand of cigarettes, Altria (NYSE: MO) offers tobacco and nicotine products.
Why Are We Positive On MO?
- Products command premium prices and result in a best-in-class gross margin of 70.2%
- Healthy operating margin of 53.6% shows it’s a well-run company with efficient processes
- Robust free cash flow margin of 42.9% gives it many options for capital deployment
Altria is trading at $58.80 per share, or 11x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
