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.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. 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:
Darden (DRI)
Market Cap: $24.51 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 Does DRI Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 6% over the last six years was below our standards for the restaurant sector
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Gross margin of 21.5% is below its competitors, leaving less money for marketing and promotions
Darden is trading at $210.19 per share, or 19.5x forward P/E. To fully understand why you should be careful with DRI, check out our full research report (it’s free).
Charles River Laboratories (CRL)
Market Cap: $7.99 billion
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Why Does CRL Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Charles River Laboratories’s stock price of $162.31 implies a valuation ratio of 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than CRL.
One Stock to Watch:
Yum! Brands (YUM)
Market Cap: $39.87 billion
Spun off as an independent company from PepsiCo, Yum! Brands (NYSE: YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
Why Does YUM Stand Out?
- Rapidly increasing restaurant base reflects a desire to sell in new markets and scale quickly
- Excellent operating margin of 31.9% highlights the efficiency of its business model
- YUM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $145.25 per share, Yum! Brands trades at 22.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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 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-small-cap company Comfort Systems (+782% 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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