While the S&P 500 (^GSPC) includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds.
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 are two S&P 500 stocks positioned to outperform and one best left off your watchlist.
One Stock to Sell:
General Motors (GM)
Market Cap: $55.41 billion
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Are We Hesitant About GM?
- Underwhelming unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Free cash flow margin dropped by 7.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
General Motors’s stock price of $58.18 implies a valuation ratio of 6.4x forward P/E. Read our free research report to see why you should think twice about including GM in your portfolio.
Two Stocks to Watch:
Cadence Design Systems (CDNS)
Market Cap: $98.27 billion
Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ:CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.
Why Is CDNS on Our Radar?
- Average billings growth of 25.5% over the last year enhances its liquidity and shows there is steady demand for its products
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- CDNS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Cadence Design Systems is trading at $362.74 per share, or 17.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Moody's (MCO)
Market Cap: $91.07 billion
Founded in 1900 during America's railroad boom when investors needed reliable information on bond risks, Moody's (NYSE:MCO) provides credit ratings, risk assessment tools, and analytical solutions that help organizations evaluate financial risks and make informed investment decisions.
Why Is MCO a Top Pick?
- Impressive 15% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 23% to outpace its revenue gains
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $507.80 per share, Moody's trades at 34.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. 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-micro-cap company Tecnoglass (+1,754% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.