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. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that could be in trouble.
Two Stocks to Sell:
Generac (GNRC)
Market Cap: $12.54 billion
With its name deriving from a combination of “generating” and “AC”, Generac (NYSE: GNRC) offers generators and other power products for residential, industrial, and commercial use.
Why Are We Hesitant About GNRC?
- Sales trends were unexciting over the last two years as its 2.3% annual growth was below the typical industrials company
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Generac is trading at $212.60 per share, or 25.4x forward P/E. Dive into our free research report to see why there are better opportunities than GNRC.
Capital One (COF)
Market Cap: $122.8 billion
Starting as a credit card company in 1988 before expanding into a full-service bank, Capital One (NYSE: COF) is a financial services company that offers credit cards, auto loans, banking services, and commercial lending to consumers and businesses.
Why Do We Think Twice About COF?
- Performance over the past five years shows its incremental sales were less profitable, as its 4.6% annual earnings per share growth trailed its revenue gains
- Large asset base makes it harder to grow tangible book value per share quickly, and its annual tangible book value per share growth of 1.3% over the last two years was below our standards for the financials sector
- ROE of 9.7% reflects management’s challenges in identifying attractive investment opportunities
Capital One’s stock price of $199.05 implies a valuation ratio of 9.9x forward P/E. Check out our free in-depth research report to learn more about why COF doesn’t pass our bar.
One Stock to Buy:
Jack Henry (JKHY)
Market Cap: $11.25 billion
Founded in 1976 by two entrepreneurs who saw the need for specialized banking software in the early days of financial computing, Jack Henry & Associates (NASDAQ: JKHY) provides technology solutions that help banks and credit unions innovate, differentiate, and compete while serving the evolving needs of their accountholders.
Why Should You Buy JKHY?
- Annual revenue growth of 7.6% over the last five years was above the sector average and underscores its products and services value to customers
- Incremental sales over the last two years boosted profitability as its annual earnings per share growth of 16.8% outstripped its revenue performance
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $155.90 per share, Jack Henry trades at 23.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
