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 is leading the market forward and two that may struggle.
Market Cap: $90.7 billion
With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE:CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.
Why Do We Think Twice About CVS?
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The company has faced growth challenges as its 6% annual revenue increases over the last two years fell short of other healthcare companies
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Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
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Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.1% annually while its revenue grew
CVS Health is trading at $71.09 per share, or 10x forward P/E. Check out our free in-depth research report to learn more about why CVS doesn’t pass our bar.
Market Cap: $22.73 billion
Having delivered over 850,000 homes since its founding in 1950, PulteGroup (NYSE:PHM) is one of America’s largest homebuilders, constructing single-family homes, townhouses, and condominiums for first-time, move-up, and active adult buyers across 46 markets in 25 states.
Why Are We Cautious About PHM?
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The company has faced growth challenges as its 3.8% annual revenue increases over the last two years fell short of other industrials companies
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Earnings per share have dipped by 1.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
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Diminishing returns on capital suggest its earlier profit pools are drying up
PulteGroup’s stock price of $118.64 implies a valuation ratio of 11.2x forward P/E. Read our free research report to see why you should think twice about including PHM in your portfolio, it’s free.
Market Cap: $286 billion
With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE:MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.