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. Keeping that in mind, here is one S&P 500 stock that is leading the market forward and two that could be in trouble.
Two Stocks to Sell:
Tyson Foods (TSN)
Market Cap: $19.72 billion
Started as a simple trucking business, Tyson Foods (NYSE: TSN) is one of the world’s largest producers of chicken, beef, and pork.
Why Do We Think TSN Will Underperform?
- Sizable revenue base leads to growth challenges as its 1.5% annual revenue increases over the last three years fell short of other consumer staples companies
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 7% that must be offset through higher volumes
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
Tyson Foods’s stock price of $55.40 implies a valuation ratio of 14.8x forward P/E. Check out our free in-depth research report to learn more about why TSN doesn’t pass our bar.
Packaging Corporation of America (PKG)
Market Cap: $17.26 billion
Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products as well as displays and package protection.
Why Are We Out on PKG?
- Annual revenue growth of 1.4% over the last two years was below our standards for the industrials sector
- High input costs result in an inferior gross margin of 22.7% that must be offset through higher volumes
- Earnings per share have contracted by 4.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $194 per share, Packaging Corporation of America trades at 11.8x forward EV-to-EBITDA. If you’re considering PKG for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Applied Materials (AMAT)
Market Cap: $138.7 billion
Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ: AMAT) is the largest provider of semiconductor wafer fabrication equipment.
Why Are We Positive On AMAT?
- Annual revenue growth of 12.7% over the last five years was superb and indicates its market share increased during this cycle
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 29.3%, and its profits increased over the last five years as it scaled
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Applied Materials is trading at $172.73 per share, or 18.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% 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.
