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 that could deliver good returns and one that may struggle.
One Stock to Sell:
Equifax (EFX)
Market Cap: $32.81 billion
Holding detailed financial records on over 800 million consumers worldwide and dating back to 1899, Equifax (NYSE: EFX) is a global data analytics company that collects, analyzes, and sells consumer and business credit information to lenders, employers, and other businesses.
Why Does EFX Worry Us?
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 6.8 percentage points
- Annual earnings per share growth of 4% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up
At $264.13 per share, Equifax trades at 33.3x forward P/E. To fully understand why you should be careful with EFX, check out our full research report (it’s free).
Two Stocks to Watch:
ResMed (RMD)
Market Cap: $37.56 billion
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Do We Like RMD?
- Constant currency growth averaged 12% over the past two years, showing it can expand globally regardless of the macroeconomic environment
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 15.7% outpaced its revenue gains
- Free cash flow margin jumped by 7.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
ResMed’s stock price of $256.59 implies a valuation ratio of 25.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Cardinal Health (CAH)
Market Cap: $39.25 billion
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE: CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Does CAH Stand Out?
- Massive revenue base of $222.3 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Sales outlook for the upcoming 12 months calls for 9.5% growth, an acceleration from its two-year trend
- Earnings per share grew by 7.7% annually over the last five years and topped the peer group average
Cardinal Health is trading at $164 per share, or 18.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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 Strong Momentum Stocks for this week. 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 Exlservice (+354% 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
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