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.

Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here are two S&P 500 stocks leading the market forward and one that may struggle.

One Stock to Sell:

Paycom (PAYC)

Market Cap: $11.27 billion

Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE: PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.

Why Do We Think Twice About PAYC?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 9.7% average billings growth over the last year was weak
2. Estimated sales growth of 9.4% for the next 12 months implies demand will slow from its two-year trend
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 4.8 percentage points

Paycom’s stock price of $200.55 implies a valuation ratio of 5.3x forward price-to-sales. To fully understand why you should be careful with PAYC, check out our full research report (it’s free for active Edge members).

Two Stocks to Watch:

ServiceNow (NOW)

Market Cap: $194.9 billion

Built on a single code base that processes over 4 billion workflow transactions daily, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.

Why Is NOW a Top Pick?

1. Current remaining performance obligations (cRPO) have averaged 22.9% growth over the last year, showing it has a pipeline of unfulfilled contracts that will support revenue in the future
2. Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
3. NOW is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

ServiceNow is trading at $940.60 per share, or 13.7x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

UnitedHealth (UNH)

Market Cap: $326.5 billion

With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.

Why Does UNH Stand Out?

1. Massive revenue base of $422.8 billion gives it meaningful leverage when negotiating reimbursement rates
2. Estimated revenue growth of 8.4% for the next 12 months implies its momentum over the last two years will continue
3. Industry-leading 20.5% return on capital demonstrates management’s skill in finding high-return investments

At $360.07 per share, UnitedHealth trades at 22.5x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 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-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

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