Petr Huřťák
4 min read
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.
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 leading the market forward and two that may struggle.
Market Cap: $19.69 billion
Expeditors (NYSE:EXPD) offers air and ocean freight as well as brokerage services.
Why Do We Think Twice About EXPD?
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Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.3% for the last two years
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Gross margin of 13.4% reflects its high production costs
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Waning returns on capital imply its previous profit engines are losing steam
Expeditors’s stock price of $145.53 implies a valuation ratio of 25.1x forward P/E. Check out our free in-depth research report to learn more about why EXPD doesn’t pass our bar.
Market Cap: $32.19 billion
One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Why Do We Pass on LEN?
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Backlog has dropped by 19.2% on average over the past two years, suggesting it’s losing orders as competition picks up
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Earnings per share fell by 15.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
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Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.9 percentage points
At $128.25 per share, Lennar trades at 15.5x forward P/E. Read our free research report to see why you should think twice about including LEN in your portfolio, it’s free for active Edge members.
Market Cap: $115.5 billion
With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Why Are We Bullish on HOOD?
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Customer spending is rising as the company has focused on monetization over the last two years, leading to 47.7% annual growth in its average revenue per user
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Additional sales over the last three years increased its profitability as the 58.5% annual growth in its earnings per share outpaced its revenue
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Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
