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.
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 leading the market forward and one best left off your watchlist.
One Stock to Sell:
International Flavors & Fragrances (IFF)
Market Cap: $18.27 billion
Responsible for the scents in your favorite perfumes and the flavors in your daily snacks, International Flavors & Fragrances (NYSE: IFF) creates and manufactures ingredients for food, beverages, personal care products, and pharmaceuticals used in countless consumer goods.
Why Do We Steer Clear of IFF?
- Annual revenue declines of 4.3% over the last three years indicate problems with its market positioning
- Operating margin declined by 10.2 percentage points over the last year as its sales cratered
- Push for growth has led to negative returns on capital, signaling value destruction
International Flavors & Fragrances’s stock price of $71.52 implies a valuation ratio of 16.7x forward P/E. Check out our free in-depth research report to learn more about why IFF doesn’t pass our bar.
Two Stocks to Watch:
Ulta (ULTA)
Market Cap: $23.58 billion
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Are We Positive On ULTA?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Comparable store sales rose by 3% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Ulta is trading at $540.14 per share, or 18.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Lululemon (LULU)
Market Cap: $18.81 billion
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Are We Bullish on LULU?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 2.6% growth over the past two years
- Unique assortment of products and pricing power result in a best-in-class gross margin of 57.9%
- Highly efficient business model is illustrated by its impressive 21.7% operating margin
At $163.10 per share, Lululemon trades at 13x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
