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 is positioned to outperform and two best left off your watchlist.
Two Stocks to Sell:
CSX (CSX)
Market Cap: $67.81 billion
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.
Why Do We Pass on CSX?
- Disappointing unit sales over the past two years imply it may need to invest in improvements to get back on track
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 6.5% annually, worse than its revenue
- Free cash flow margin dropped by 18.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
CSX’s stock price of $36.32 implies a valuation ratio of 20x forward P/E. Read our free research report to see why you should think twice about including CSX in your portfolio.
Citigroup (C)
Market Cap: $209.7 billion
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Why Should You Sell C?
- Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 5.9% for the last five years
- Estimated net interest income growth of 3.2% for the next 12 months implies demand will slow from its five-year trend
- Inferior net interest margin of 2.4% means it must compensate for lower profitability through increased loan originations
At $117.23 per share, Citigroup trades at 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than C.
One Stock to Buy:
AutoZone (AZO)
Market Cap: $56.31 billion
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE: AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
Why Are We Backing AZO?
- Same-store sales provide a solid foundation for the steady expansion of its stores
- Highly efficient business model is illustrated by its impressive 19.6% operating margin
- ROIC punches in at 40.4%, illustrating management’s expertise in identifying profitable investments
AutoZone is trading at $3,398 per share, or 21.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-micro-cap company Kadant (+351% 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.
