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.
Even among blue-chip stocks, not all investments are created equal – which is why we built StockStory to help you navigate the market. That said, here is one S&P 500 stock that could deliver good returns and two that may struggle.
Market Cap: $49.95 billion
Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors.
Why Are We Cautious About KEYS?
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3.1% annual revenue growth over the last two years was slower than its industrials peers
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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
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Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $290.00 per share, Keysight trades at 31.7x forward P/E. If you’re considering KEYS for your portfolio, see our FREE research report to learn more.
Market Cap: $24.66 billion
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ:CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Do We Think Twice About CINF?
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Earnings per share lagged its peers over the last two years as they only grew by 14.7% annually
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Estimated book value per share growth of 4.3% for the next 12 months implies profitability will slow from its two-year trend
Cincinnati Financial’s stock price of $158.42 implies a valuation ratio of 1.5x forward P/B. To fully understand why you should be careful with CINF, check out our full research report (it’s free).
Market Cap: $669.6 billion
One of the successor companies to John D. Rockefeller’s Standard Oil monopoly that was broken up in 1911, ExxonMobil (NYSE:XOM) explores for and produces crude oil and natural gas, refines and sells petroleum products, and manufactures petrochemicals.
Why Do We Like XOM?
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Massive revenue base of $332.2 billion makes it a household name that influences purchasing decisions
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EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
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Free cash flow margin of 10.6% is higher than many in the industry, giving it breathing room and optionality