The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
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 that could deliver good returns and one best left off your watchlist.
One Stock to Sell:
Mondelez (MDLZ)
Market Cap: $73.76 billion
Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Does MDLZ Give Us Pause?
- Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 8.2 percentage points
- Earnings per share were flat over the last three years while its revenue grew, showing its incremental sales were less profitable
At $57.69 per share, Mondelez trades at 18.8x forward P/E. Read our free research report to see why you should think twice about including MDLZ in your portfolio.
Two Stocks to Watch:
NetApp (NTAP)
Market Cap: $20.39 billion
Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ: NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.
Why Could NTAP Be a Winner?
- Billings have averaged 7.6% growth over the past two years, showing it’s securing new contracts that could potentially increase in value over time
- Adjusted operating margin improvement of 5.4 percentage points over the last five years demonstrates its ability to scale efficiently
- Robust free cash flow margin of 19.4% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
NetApp is trading at $102.65 per share, or 12.2x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Charles Schwab (SCHW)
Market Cap: $164.3 billion
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Are We Bullish on SCHW?
- Annual revenue growth of 15.4% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 24.9%, which outperformed its revenue gains over the last two years
- Industry-leading 14.4% return on equity demonstrates management’s skill in finding high-return investments
Charles Schwab’s stock price of $93.39 implies a valuation ratio of 15.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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