The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here is one S&P 500 stock that is leading the market forward and two best left off your watchlist.
Two Stocks to Sell:
Sherwin-Williams (SHW)
Market Cap: $84.84 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Are We Cautious About SHW?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 2.4% for the next year implies demand will be shaky
- 7.6 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
Sherwin-Williams’s stock price of $340.70 implies a valuation ratio of 27.2x forward P/E. If you’re considering SHW for your portfolio, see our FREE research report to learn more.
Lennar (LEN)
Market Cap: $33.01 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?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 19.2% declines over the past two years
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.1 percentage points
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Lennar is trading at $128.46 per share, or 13.4x forward P/E. Dive into our free research report to see why there are better opportunities than LEN.
One Stock to Watch:
TJX (TJX)
Market Cap: $160.6 billion
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
Why Is TJX on Our Radar?
- Comparable store sales rose by 4.1% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Massive revenue base of $57.93 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets
At $144.85 per share, TJX trades at 30.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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
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