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 are two S&P 500 stocks that could deliver good returns and one best left off your watchlist.
One Stock to Sell:
Pfizer (PFE)
Market Cap: $144 billion
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE: PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Are We Cautious About PFE?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 17.4 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Pfizer’s stock price of $25.28 implies a valuation ratio of 8.8x forward P/E. Read our free research report to see why you should think twice about including PFE in your portfolio.
Two Stocks to Buy:
ServiceNow (NOW)
Market Cap: $184 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 Are We Backing NOW?
- Sales pipeline is in good shape as its current remaining performance obligations (cRPO) averaged 22.9% growth over the last year
- Highly efficient business model is illustrated by its impressive 13.3% operating margin, and its operating leverage amplified its profits over the last year
- NOW is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
ServiceNow is trading at $885.99 per share, or 12.9x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free.
Copart (CPRT)
Market Cap: $46.23 billion
Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Is CPRT a Good Business?
- Market share has increased this cycle as its 15.6% annual revenue growth over the last five years was exceptional
- Strong free cash flow margin of 23% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $47.97 per share, Copart trades at 27.9x 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
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum 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
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