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.
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 is positioned to outperform and two that could be in trouble.
Two Stocks to Sell:
Thermo Fisher (TMO)
Market Cap: $162.9 billion
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE: TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Does TMO Fall Short?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 6.7 percentage points
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
At $439.30 per share, Thermo Fisher trades at 17.6x forward P/E. Read our free research report to see why you should think twice about including TMO in your portfolio.
Morgan Stanley (MS)
Market Cap: $303.6 billion
Founded in 1924 during the post-WWI economic boom by former JP Morgan partners, Morgan Stanley (NYSE: MS) is a global financial services firm that provides investment banking, wealth management, and investment management services to corporations, governments, institutions, and individuals.
Why Are We Wary of MS?
- The company has faced growth challenges as its 6.1% annual revenue increases over the last five years fell short of other financials companies
- Earnings per share lagged its peers over the last five years as they only grew by 7.3% annually
- Sizable asset base leads to capital growth challenges as its 5.8% annual tangible book value per share increases over the last five years fell short of other financials companies
Morgan Stanley is trading at $192.20 per share, or 16.4x forward P/E. Dive into our free research report to see why there are better opportunities than MS.
One Stock to Watch:
Kinder Morgan (KMI)
Market Cap: $74.82 billion
Operating what amounts to the toll roads of the energy industry, Kinder Morgan (NYSE: KMI) transports natural gas, refined petroleum products, and crude oil through its pipeline network across North America.
Why Do We Watch KMI?
- Massive revenue base of $17.53 billion makes it a household name that influences purchasing decisions
- EBITDA margin expanded by 4.9 percentage points over the last five years as it scaled and became more efficient
- KMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Kinder Morgan’s stock price of $33.46 implies a valuation ratio of 22.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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