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 are two S&P 500 stocks positioned to outperform and one that could be in trouble.
One Stock to Sell:
Williams-Sonoma (WSM)
Market Cap: $22.6 billion
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE: WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Why Do We Think Twice About WSM?
- Annual revenue declines of 2.6% over the last three years indicate problems with its market positioning
- Store closures and poor same-store sales reveal weak demand and a push toward operational efficiency
- Earnings growth over the last three years fell short of the peer group average as its EPS only increased by 4.3% annually
Williams-Sonoma is trading at $190.84 per share, or 18.9x forward P/E. Check out our free in-depth research report to learn more about why WSM doesn’t pass our bar.
Two Stocks to Watch:
Apple (AAPL)
Market Cap: $4.48 trillion
Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Why Is AAPL on Our Radar?
- Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
At $305.95 per share, Apple trades at 33.2x forward price-to-earnings. Is now the right time to buy? See for yourself in our full research report, it’s free.
Diamondback Energy (FANG)
Market Cap: $56.54 billion
Sporting one of Wall Street's most memorable ticker symbols, Diamondback Energy (NASDAQ: FANG) drills for and produces oil and natural gas from underground rock formations in the Permian Basin of West Texas and New Mexico.
Why Do We Love FANG?
- Market share has increased this cycle as its 42.8% annual revenue growth over the last ten years was exceptional
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 80.2%
- Robust free cash flow margin of 37.1% gives it many options for capital deployment
Diamondback Energy’s stock price of $200.08 implies a valuation ratio of 10.2x 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 (+1,326% between June 2020 and June 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.
