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.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two best left off your watchlist.
Two Stocks to Sell:
Keurig Dr Pepper (KDP)
Market Cap: $45.26 billion
Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ: KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.
Why Does KDP Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.9% over the last three years was below our standards for the consumer staples sector
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.1 percentage points
- Underwhelming 5.8% return on capital reflects management’s difficulties in finding profitable growth opportunities
Keurig Dr Pepper is trading at $33.34 per share, or 15.9x forward P/E. Check out our free in-depth research report to learn more about why KDP doesn’t pass our bar.
Lennar (LEN)
Market Cap: $30.95 billion
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Why Should You Sell LEN?
- Backlog has dropped by 20.4% on average over the past two years, suggesting it’s losing orders as competition picks up
- Earnings per share fell by 11.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin shrank by 13.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Lennar’s stock price of $119.53 implies a valuation ratio of 11.3x forward P/E. If you’re considering LEN for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Progressive (PGR)
Market Cap: $142.4 billion
Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE: PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.
Why Do We Love PGR?
- Annual net premiums earned growth of 20.3% over the last two years was superb and indicates its market share increased during this cycle
- Balance sheet strength has increased this cycle as its 41.7% annual book value per share growth over the last two years was exceptional
- Expected book value per share growth of 24.9% for the next year suggests its capital position will strengthen considerably
At $243.23 per share, Progressive trades at 4.1x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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-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
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