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. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that may struggle.

Two Stocks to Sell:

Darden (DRI)

Market Cap: $25.45 billion

Founded in 1968 as Red Lobster, Darden (NYSE: DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.

Why Do We Think Twice About DRI?

1. Annual sales growth of 5.7% over the last six years lagged behind its restaurant peers as its large revenue base made it difficult to generate incremental demand
2. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
3. Gross margin of 21.3% is below its competitors, leaving less money for marketing and promotions

At $217.50 per share, Darden trades at 21.4x forward P/E. Read our free research report to see why you should think twice about including DRI in your portfolio.

AMETEK (AME)

Market Cap: $40.86 billion

Started from its humble beginnings in motor repair, AMETEK (NYSE: AME) manufactures electronic devices used in industries like aerospace, power, and healthcare.

Why Does AME Give Us Pause?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Estimated sales growth of 2.1% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin shrank by 2.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

AMETEK’s stock price of $176.96 implies a valuation ratio of 24.4x forward P/E. Dive into our free research report to see why there are better opportunities than AME.

One Stock to Buy:

Broadcom (AVGO)

Market Cap: $1.17 trillion

Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.

Why Are We Backing AVGO?

1. Market share has increased this cycle as its 27.6% annual revenue growth over the last two years was exceptional
2. Superior product capabilities and pricing power lead to a best-in-class gross margin of 75.8%
3. Strong free cash flow margin of 41.3% enables it to reinvest or return capital consistently

Broadcom is trading at $248.40 per share, or 34.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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