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.

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 is one S&P 500 stock that is leading the market forward and two best left off your watchlist.

Two Stocks to Sell:

Teradyne (TER)

Market Cap: $30.57 billion

Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.

Why Are We Wary of TER?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.1% annually over the last five years
2. Inability to adjust its cost structure while its revenue declined over the last five years led to a 15.1 percentage point drop in the company’s operating margin
3. Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 6.6% annually, worse than its revenue

Teradyne’s stock price of $195.69 implies a valuation ratio of 37.4x forward P/E. To fully understand why you should be careful with TER, check out our full research report (it’s free for active Edge members).

Waters Corporation (WAT)

Market Cap: $22.51 billion

Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.

Why Do We Think Twice About WAT?

1. Annual revenue growth of 1.8% over the last two years was below our standards for the healthcare sector
2. 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
3. Eroding returns on capital suggest its historical profit centers are aging

Waters Corporation is trading at $380.13 per share, or 27x forward P/E. Read our free research report to see why you should think twice about including WAT in your portfolio.

One Stock to Buy:

TransDigm (TDG)

Market Cap: $71.91 billion

Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.

Why Are We Bullish on TDG?

1. Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 12% over the past two years
2. Additional sales over the last two years increased its profitability as the 20.2% annual growth in its earnings per share outpaced its revenue
3. Robust free cash flow margin of 19.6% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety

At $1,277 per share, TransDigm trades at 32.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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.