While the S&P 500 (^GSPC) includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds.
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 are two S&P 500 stocks that could deliver good returns and one that may struggle.
One Stock to Sell:
STERIS (STE)
Market Cap: $20.64 billion
With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE: STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments.
Why Are We Hesitant About STE?
- Annual revenue growth of 7.5% over the last two years was below our standards for the healthcare sector
- Static adjusted operating margin over the last five years shows it couldn’t become more efficient
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $211.73 per share, STERIS trades at 19.2x forward P/E. To fully understand why you should be careful with STE, check out our full research report (it’s free).
Two Stocks to Watch:
Applied Materials (AMAT)
Market Cap: $448.2 billion
Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ: AMAT) is the largest provider of semiconductor wafer fabrication equipment.
Why Could AMAT Be a Winner?
- Projected revenue growth of 34.7% for the next 12 months indicates demand will rise above its two-year trend
- Healthy operating margin of 29.1% shows it’s a well-run company with efficient processes
- Industry-leading 46.2% return on capital demonstrates management’s skill in finding high-return investments
Applied Materials’s stock price of $565.83 implies a valuation ratio of 35.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Cintas (CTAS)
Market Cap: $80.19 billion
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ: CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Why Will CTAS Outperform?
- Annual revenue growth of 9.6% over the last five years was superb and indicates its market share increased during this cycle
- Strong free cash flow margin of 16.4% enables it to reinvest or return capital consistently
- ROIC punches in at 26.6%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
Cintas is trading at $200.00 per share, or 36.8x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
