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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here are two S&P 500 stocks positioned to outperform and one best left off your watchlist.
One Stock to Sell:
Microchip Technology (MCHP)
Market Cap: $35.57 billion
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Are We Out on MCHP?
- Sales tumbled by 4.2% annually over the last five years, showing market trends are working against its favor during this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- 14.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $65.72 per share, Microchip Technology trades at 32.4x forward P/E. Dive into our free research report to see why there are better opportunities than MCHP.
Two Stocks to Watch:
Electronic Arts (EA)
Market Cap: $50.86 billion
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ: EA) is one of the world’s largest video game publishers.
Why Should EA Be on Your Watchlist?
- Brand halo makes it a customer acquisition machine that onboards new users at scale without spending much money
- Highly efficient business model is illustrated by its impressive 32.9% EBITDA margin
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Electronic Arts’s stock price of $203.93 implies a valuation ratio of 15.5x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
HCA Healthcare (HCA)
Market Cap: $111.1 billion
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Is HCA a Good Business?
- Massive revenue base of $74.37 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Share repurchases over the last five years enabled its annual earnings per share growth of 21.2% to outpace its revenue gains
- Free cash flow margin grew by 11.2 percentage points over the last five years, giving the company more chips to play with
HCA Healthcare is trading at $486.71 per share, or 16.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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