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. 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:
Live Nation (LYV)
Market Cap: $36.86 billion
Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE: LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.
Why Does LYV Worry Us?
- The company has faced growth challenges as its 5.3% annual revenue increases over the last two years fell short of other consumer discretionary companies
- Poor expense management has led to an operating margin of 4.3% that is below the industry average
- Projected 1.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
Live Nation’s stock price of $158.66 implies a valuation ratio of 117.6x forward P/E. To fully understand why you should be careful with LYV, check out our full research report (it’s free).
Dover (DOV)
Market Cap: $29.92 billion
A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE: DOV) manufactures engineered components and specialized equipment for numerous industries.
Why Does DOV Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.6% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $221.88 per share, Dover trades at 20.9x forward P/E. Dive into our free research report to see why there are better opportunities than DOV.
One Stock to Watch:
UnitedHealth (UNH)
Market Cap: $265 billion
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Are We Positive On UNH?
- Annual revenue growth of 11.7% over the last five years was above the sector average and underscores its products and services value to customers
- Dominant market position is represented by its $447.6 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- Industry-leading 19.6% return on capital demonstrates management’s skill in finding high-return investments
UnitedHealth is trading at $291.45 per share, or 16.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
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