Bloom Energy Outshines Procter & Gamble and Avery Dennison in S&P 500

The S&P 500 index includes industry leaders, but not every stock in it is a winner. Some companies are past their prime due to poor execution, weak financials, or structural headwinds.

We've identified one S&P 500 stock that's positioned to outperform and two others that are best left off your watchlist.

One of the stocks we recommend avoiding is Procter & Gamble (PG). The consumer products giant has a stagnant core business, with organic revenue disappointing over the past two years. It may need acquisitions to stimulate growth, which could be challenging given its large market cap of $334.3 billion and high valuation ratio of 20.8x forward P/E.

Another stock we advise selling is Avery Dennison (AVY). Its core business has also underperformed over the past two years, with organic revenue disappointing and estimated sales growth of just 2.3% for the next 12 months. The company's earnings growth has lagged behind its sector average, growing by only 2.9% annually over the last five years.

On the other hand, we recommend investing in Bloom Energy (BE). With annual revenue growth of 53.1% over the last two years, it indicates a significant increase in market share. The company has also turned its free cash flow positive over the last five years and is seeing growing returns on capital.