Geopolitical events, like rising tensions between the US and Iran, often shake global markets, presenting both challenges and opportunities for investors. With increased market volatility, it’s more important than ever to evaluate stocks with a disciplined approach. If you're wondering which stocks might be worth buying and which ones to avoid, recent analysis provides insights into three stocks to buy—S&P Global, Amazon, and one unmentioned pick—and three stocks to potentially sell, including Johnson & Johnson. Here's a closer look at the recommendations through an analytical lens.

S&P Global: A compelling long-term investment?

S&P Global (SPGI) operates the S&P 500 index, is one of only two globally recognized credit-rating agencies, and sells market intelligence data to institutions worldwide. The company operates with a regulatory moat—barriers to entry that are exceptionally high due to entrenched trust and regulatory approval.

Financial Strength:

• Market Cap: $130 billion
• Enterprise Value: $152 billion (adjusted for debt)
• Consistent Cash Flow: Averaging over $4 billion annually in the last five years (with $5.5 billion last year)

Valuation and Metrics:

• P/E Ratio: 29x earnings
• Free Cash Flow Multiple: 24x cash flow
• Profit Margins: 29% over a decade and consistent
• Growth Rate: Revenue growth of 11% annually for the last 10 years, primarily through organic efforts

While S&P Global’s price-to-earnings growth (PEG) ratio of 3.33 indicates the stock may be a bit pricey relative to its growth rate, its wide moat and the strength of its cash flow make it an appealing option for long-term investors. However, declining returns on capital warrant scrutiny, as they may suggest weakening efficiency in reinvestment. At a current price of $425, conservative valuation models suggest a buy zone closer to $245–$340, depending on growth assumptions.

Johnson & Johnson: A sell recommendation?

Johnson & Johnson (J&J), a global leader in pharmaceuticals and healthcare, has long been considered a defensive investment due to its diversified portfolio, including MedTech and consumer health products. However, its current valuation raises red flags for analysts.

Financial Strength:

• Market Cap: $600 billion
• Free Cash Flow: $19–$20 billion annually
• Dividend Yield: 2%, consuming $12 billion of free cash flow

Valuation and Metrics:

• P/E Growth Ratio: 1.48 (more reasonable than SPGI)
• Profit Margins: Consistently improving, from 21.5% a decade ago to 28.5% last year
• Revenue Growth: Analysts predict 5–7% annual revenue growth over coming years, despite historical growth rates of just 2.5–3% annually

J&J’s stock is currently trading about 32% above Morningstar’s price target. While it deserves a premium valuation due to its consistent cash flow and brand resilience, it may be overvalued for now. Using conservative projections, intrinsic value calculations yield a potential buy zone around $108–$150, making the current price unattractive.

Amazon: Is there value in technology giants?

Amazon (AMZN) is one of the most complex companies to evaluate due to its heavy investments in future growth. Known for reinvesting aggressively, especially in areas like artificial intelligence (AI) and cloud infrastructure, Amazon’s short-term free cash flow often paints a misleading picture.

Financial Strength:

• Market Cap: $2.27 trillion
• Net Income (2023): $77 billion
• Free Cash Flow: Highly variable ($7.7 billion in 2023 due to $132 billion in capex)

Valuation and Metrics:

• P/E Ratio: 29x earnings
• Profit Margins: Expanding from 6% to 10.5% over the last decade
• Revenue Growth: Double-digit growth forecast over the next four years

Amazon’s advertising and AWS businesses demonstrate enormous profitability potential, even as capital expenditures for AI and infrastructure exert pressure in the near term. Historically, these investments have paid off. Analysts predict profits to more than double in the next four years, but significant risks remain as competitors also ramp up AI spending. Intrinsic valuation estimates suggest Amazon is fairly priced at its current range but could offer stronger returns if purchased during pullbacks.

Comparing financial metrics: S&P Global, J&J, and Amazon

Metrics	S&P Global	Johnson & Johnson	Amazon
Market Capitalization	$130 billion	$600 billion	$2.27 trillion
Free Cash Flow	$5.5 billion	$20 billion	Highly variable (~$7.7B)
P/E Ratio	29x earnings	1.48 PEG	29x earnings
Dividend Yield	~0.9%	2%	None
Revenue Growth (historical)	11%	2.5–3%	Double-digit
Profit Margin	29%	28.5%	10.5%

Key takeaways for investors

1. Buy-worthy traits: Companies like S&P Global and Amazon stand out for their dominant market positions, consistent cash flow, and large growth moats. These are stocks that could thrive in a long-term portfolio when purchased at reasonable valuations.
2. Consider selling or avoiding: Johnson & Johnson remains a reliable company but could be overpriced relative to its growth prospects.
3. Volatility brings opportunities: Geopolitical tensions and market downturns often create buying opportunities, but disciplined investing requires a focus on long-term fundamentals rather than short-term noise.

Investors should remember to evaluate companies with realistic assumptions about future growth and profitability while building a portfolio resilient to broader market conditions.