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. That said, here is one S&P 500 stock that could deliver good returns and two that could be in trouble.
Two Stocks to Sell:
Disney (DIS)
Market Cap: $166.9 billion
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Do We Steer Clear of DIS?
- Annual sales growth of 10.8% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 9.4% for the last two years
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $96.32 per share, Disney trades at 13x forward P/E. Check out our free in-depth research report to learn more about why DIS doesn’t pass our bar.
CoStar (CSGP)
Market Cap: $11.64 billion
With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ: CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.
Why Does CSGP Give Us Pause?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.6% annually
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 17.4 percentage points
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
CoStar’s stock price of $28.85 implies a valuation ratio of 20.2x forward P/E. Read our free research report to see why you should think twice about including CSGP in your portfolio.
One Stock to Watch:
McDonald's (MCD)
Market Cap: $187.5 billion
With nicknames spanning Mickey D's in the U.S. to Makku in Japan, McDonald’s (NYSE: MCD) is a fast-food behemoth known for its convenience and broken ice cream machines.
Why Does MCD Stand Out?
- Rapidly increasing restaurant base reflects a desire to sell in new markets and scale quickly
- Asset-lite franchise model is reflected in its superior unit economics and a best-in-class gross margin of 57.1%
- MCD is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
McDonald's is trading at $264.15 per share, or 20.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
