The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
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 could be in trouble.
Two Stocks to Sell:
Textron (TXT)
Market Cap: $15.79 billion
Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.
Why Does TXT Give Us Pause?
- The company has faced growth challenges as its 4.9% annual revenue increases over the last two years fell short of other industrials companies
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.7%
- 4.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $90.33 per share, Textron trades at 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than TXT.
General Dynamics (GD)
Market Cap: $100.1 billion
Creator of the famous M1 Abrahms tank, General Dynamics (NYSE: GD) develops aerospace, marine systems, combat systems, and information technology products.
Why Does GD Fall Short?
- 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 6.9% for the last five years
- Estimated sales growth of 3.9% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin shrank by 2.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
General Dynamics’s stock price of $369.47 implies a valuation ratio of 21.9x forward P/E. Check out our free in-depth research report to learn more about why GD doesn’t pass our bar.
One Stock to Watch:
Marvell Technology (MRVL)
Market Cap: $170.7 billion
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Does MRVL Stand Out?
- Annual revenue growth of 22.9% over the last five years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 45.5% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Operating margin improvement of 19.8 percentage points over the last five years demonstrates its ability to scale efficiently
Marvell Technology is trading at $194.60 per share, or 41.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
