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 are two S&P 500 stocks positioned to outperform and one best left off your watchlist.
Market Cap: $175.9 billion
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ:TXN) is the world’s largest producer of analog semiconductors.
Why Are We Wary of TXN?
-
Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
-
Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.8% annually
-
Free cash flow margin shrank by 19.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Texas Instruments is trading at $192.91 per share, or 31x forward P/E. Read our free research report to see why you should think twice about including TXN in your portfolio, it’s free.
Market Cap: $119.1 billion
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE:HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Are We Bullish on HCA?
-
Massive revenue base of $75.6 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
-
Share buybacks catapulted its annual earnings per share growth to 21%, which outperformed its revenue gains over the last five years
-
Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
HCA Healthcare’s stock price of $529.61 implies a valuation ratio of 17.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Market Cap: $51.25 billion
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Could CAH Be a Winner?
-
Enormous revenue base of $244.7 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
-
Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 10.6% is above its two-year trend
-
Earnings per share have comfortably outperformed the peer group average over the last five years, increasing by 10.2% annually