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. Keeping that in mind, here is one S&P 500 stock that is leading the market forward and two that could be in trouble.
Two Stocks to Sell:
Teradyne (TER)
Market Cap: $13.33 billion
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ:TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Why Are We Cautious About TER?
- Annual revenue growth of 3% over the last five years was below our standards for the semiconductor sector
- Estimated sales growth of 2.3% for the next 12 months is soft and implies weaker demand
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 7.9 percentage points
At $83.09 per share, Teradyne trades at 23x forward P/E. Read our free research report to see why you should think twice about including TER in your portfolio.
Hewlett Packard Enterprise (HPE)
Market Cap: $23.16 billion
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE:HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Is HPE Risky?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.9% over the last five years was below our standards for the business services sector
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 5.9% annually
- 6.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Hewlett Packard Enterprise’s stock price of $17.69 implies a valuation ratio of 9.1x forward P/E. To fully understand why you should be careful with HPE, check out our full research report (it’s free).
One Stock to Buy:
GE Aerospace (GE)
Market Cap: $252.3 billion
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE:GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Will GE Outperform?
- Annual revenue growth of 20.1% over the past two years was outstanding, reflecting market share gains this cycle
- Robust free cash flow margin of 16.2% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
- Rising returns on capital show management is finding more attractive investment opportunities
GE Aerospace is trading at $236.30 per share, or 42.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today