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.
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 best left off your watchlist.
Two Stocks to Sell:
Williams-Sonoma (WSM)
Market Cap: $27.47 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?
- Sales tumbled by 2.6% annually over the last three years, showing consumer trends are working against it
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Same-store sales growth averaged 2% over the past two years, showing it’s bringing new and repeat shoppers into its stores
At $236.45 per share, Williams-Sonoma trades at 24.5x forward P/E. If you’re considering WSM for your portfolio, see our FREE research report to learn more.
A. O. Smith (AOS)
Market Cap: $8.24 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 Are We Hesitant About AOS?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 2.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
A. O. Smith is trading at $59.81 per share, or 15.3x forward P/E. Read our free research report to see why you should think twice about including AOS in your portfolio.
One Stock to Buy:
APA Corporation (APA)
Market Cap: $12.84 billion
Operating in three continents with a history stretching back to 1954, APA Corporation (NASDAQ: APA) explores for, develops, and produces crude oil, natural gas, and natural gas liquids in the U.S., Egypt, and the U.K. North Sea.
Why Will APA Beat the Market?
- 3.4% annual revenue growth over the last ten years surpassed the sector average as its products resonated with customers
- Unparalleled revenue scale of $8.15 billion gives it advantageous pricing and terms with suppliers
- APA is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
APA Corporation’s stock price of $36.36 implies a valuation ratio of 7.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
