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.
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 leading the market forward and two that could be in trouble.
Two Stocks to Sell:
A. O. Smith (AOS)
Market Cap: $9.48 billion
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.
Why Is AOS Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 2.9% for the next year implies demand will be shaky
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 1.3% annually
At $68.13 per share, A. O. Smith trades at 17x forward P/E. Dive into our free research report to see why there are better opportunities than AOS.
Prudential (PRU)
Market Cap: $40.18 billion
Recognized by its iconic Rock of Gibraltar logo symbolizing strength and stability since 1896, Prudential Financial (NYSE: PRU) provides life insurance, annuities, retirement solutions, investment management, and other financial services to individual and institutional customers globally.
Why Do We Pass on PRU?
- Insurance policy sales contracted this cycle as net premiums earned decreased by 3.1% annually over the last five years
- Book value per share tumbled by 11.3% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
- Debt-to-equity ratio of 1.3× is concerningly high, indicating excessive leverage that could limit financial flexibility
Prudential is trading at $114.84 per share, or 1.2x forward P/B. Read our free research report to see why you should think twice about including PRU in your portfolio.
One Stock to Buy:
American Express (AXP)
Market Cap: $262.3 billion
Recognizable by its iconic green logo and the slogan "Don't leave home without it," American Express (NYSE: AXP) is a global payments company that issues credit and charge cards, processes merchant transactions, and offers travel and lifestyle benefits to consumers and businesses.
Why Is AXP a Top Pick?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 12.1% annual sales growth over the last five years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 29.9% exceeded its revenue gains over the last five years
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
American Express’s stock price of $380.50 implies a valuation ratio of 22.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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.
