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.
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 is one S&P 500 stock that could deliver good returns and two that could be in trouble.
Two Stocks to Sell:
A. O. Smith (AOS)
Market Cap: $10.68 billion
Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.
Why Is AOS Not Exciting?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Projected sales growth of 3.6% for the next 12 months suggests sluggish demand
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.2% annually
A. O. Smith’s stock price of $75.81 implies a valuation ratio of 19.2x forward P/E. Dive into our free research report to see why there are better opportunities than AOS.
Tesla (TSLA)
Market Cap: $1.54 trillion
Originally founded by Martin Eberhard and Marc Tarpenning in 2003, Tesla (NASDAQ: TSLA) is an electric vehicle company accelerating the world’s transition to sustainable energy.
Why Do We Steer Clear of TSLA?
- Tesla's scale advantage in EV production leads to gross margins that exceed incumbents such as General Motors and Ford. However, a softer macroeconomic backdrop and tariff pressures have weighed on automobile sales, which are highly cyclical.
- The company's execution ability is a question mark given its long history of delays, such as the Cybertruck and Robotaxi launches. Its sizeable investments in projects with uncertain return timelines, like Optimus, also raise skepticism from investors.
- On the bright side, Tesla's Megapack product solves a critical problem for utilities needing renewable energy storage solutions. This innovation has made the energy segment the most profitable and fastest-growing business line for the company.
Tesla is trading at $415.65 per share, or 205.2x forward price-to-earnings. Check out our free in-depth research report to learn more about why TSLA doesn’t pass our bar.
One Stock to Watch:
Elevance Health (ELV)
Market Cap: $72.2 billion
Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE: ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.
Why Are We Fans of ELV?
- Annual revenue growth of 10.3% over the last five years was above the sector average and underscores its products and services value to customers
- Unparalleled scale of $197.6 billion in revenue enables it to spread administrative costs across a larger membership base
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $333.67 per share, Elevance Health trades at 12.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
