2 S&P 500 Stocks with Competitive Advantages and 1 We Avoid

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 are two S&P 500 stocks leading the market forward and one that may struggle.

One Stock to Sell:

Pfizer (PFE)

Market Cap: $143.1 billion

With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.

Why Do We Think Twice About PFE?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. 26.6 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
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $25.17 per share, Pfizer trades at 8.6x forward P/E. If you’re considering PFE for your portfolio, see our FREE research report to learn more.

Two Stocks to Watch:

Ross Stores (ROST)

Market Cap: $60.38 billion

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Why Is ROST on Our Radar?

1. Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
2. Comparable store sales rose by 3.4% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

Ross Stores is trading at $186.60 per share, or 26.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Arthur J. Gallagher (AJG)

Market Cap: $67.6 billion

Founded in 1927 and operating in approximately 130 countries through direct operations and correspondent networks, Arthur J. Gallagher (NYSE:AJG) provides insurance brokerage, reinsurance, consulting, and third-party claims settlement services to businesses and individuals worldwide.

Why Is AJG a Good Business?

1. Impressive 16% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Earnings per share grew by 18.7% annually over the last five years, massively outpacing its peers
3. Robust free cash flow margin of 18.9% gives it many options for capital deployment

Arthur J. Gallagher’s stock price of $263.25 implies a valuation ratio of 19.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth 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 5 Strong Momentum Stocks for this week. 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 Kadant (+351% 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.