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 are two S&P 500 stocks leading the market forward and one that could be in trouble.
One Stock to Sell:
Kellanova (K)
Market Cap: $27.73 billion
With Corn Flakes as its first and most iconic product, Kellanova (NYSE: K) is a packaged foods company that is dominant in the cereal and snack categories.
Why Does K Give Us Pause?
- Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Earnings per share decreased by more than its revenue over the last three years, partly because it diluted shareholders
- Free cash flow margin dropped by 3.5 percentage points over the last year, implying the company became more capital intensive as competition picked up
Kellanova’s stock price of $80.39 implies a valuation ratio of 21.1x forward P/E. To fully understand why you should be careful with K, check out our full research report (it’s free).
Two Stocks to Watch:
Xylem (XYL)
Market Cap: $35.2 billion
Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Why Do We Like XYL?
- Impressive 20.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Superior product capabilities and pricing power lead to a premier gross margin of 37.6%
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 15.9% annually
Xylem is trading at $145.82 per share, or 29.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
ResMed (RMD)
Market Cap: $41.28 billion
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Do We Watch RMD?
- Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 10.3% over the past two years
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 14.9% annually, topping its revenue gains
- Free cash flow margin increased by 12.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $281.96 per share, ResMed trades at 27.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 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 6 Stocks for this week. 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 Kadant (+351% 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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