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. That said, here are two S&P 500 stocks positioned to outperform and one best left off your watchlist.
One Stock to Sell:
Mohawk Industries (MHK)
Market Cap: $6.76 billion
Established in 1878, Mohawk Industries (NYSE: MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Why Do We Steer Clear of MHK?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Mohawk Industries’s stock price of $108.17 implies a valuation ratio of 10.6x forward P/E. Read our free research report to see why you should think twice about including MHK in your portfolio.
Two Stocks to Buy:
Chipotle (CMG)
Market Cap: $70.49 billion
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE: CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Are We Backing CMG?
- Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
- Same-store sales growth averaged 6.2% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Enormous revenue base of $11.49 billion provides significant leverage in supplier negotiations
Chipotle is trading at $51.85 per share, or 39.9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Super Micro (SMCI)
Market Cap: $27.54 billion
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
Why Are We Bullish on SMCI?
- Impressive 81.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Massive revenue base of $21.57 billion makes it a well-known name that influences purchasing decisions
- Improving returns on capital reflect management’s ability to monetize investments
At $44.45 per share, Super Micro trades at 15x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our 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 176% over the last five years.
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.
