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. That said, here is one S&P 500 stock that could deliver good returns and two best left off your watchlist.

Two Stocks to Sell:

Darden (DRI)

Market Cap: $21.22 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. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.3% for the last six years
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
3. Gross margin of 21.6% is below its competitors, leaving less money for marketing and promotions

At $182.41 per share, Darden trades at 16.9x forward P/E. Read our free research report to see why you should think twice about including DRI in your portfolio.

AT&T (T)

Market Cap: $178.7 billion

Founded by Alexander Graham Bell, AT&T (NYSE: T) is a multinational telecomm conglomerate providing a range of communications and internet services.

Why Is T Risky?

1. Products and services aren't resonating with the market as its revenue declined by 5.6% annually over the last five years
2. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 8.5% annually, worse than its revenue
3. ROIC of 3.5% reflects management’s challenges in identifying attractive investment opportunities

AT&T is trading at $25.16 per share, or 11.6x forward P/E. If you’re considering T for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Xylem (XYL)

Market Cap: $37.24 billion

Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Why Could XYL Be a Winner?

1. Market share has increased this cycle as its 14.8% annual revenue growth over the last two years was exceptional
2. Superior product capabilities and pricing power result in a stellar gross margin of 37.7%
3. Earnings per share have massively outperformed its peers over the last five years, increasing by 17.7% annually

Xylem’s stock price of $153.78 implies a valuation ratio of 28.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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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