The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
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 positioned to outperform and two that could be in trouble.
Two Stocks to Sell:
Pool (POOL)
Market Cap: $10.73 billion
Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ: POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.
Why Does POOL Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Estimated sales growth of 1.9% for the next 12 months is soft and implies weaker demand
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $285 per share, Pool trades at 24.9x forward P/E. Check out our free in-depth research report to learn more about why POOL doesn’t pass our bar.
Illinois Tool Works (ITW)
Market Cap: $70.75 billion
Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE: ITW) manufactures engineered components and specialized equipment for numerous industries.
Why Do We Think Twice About ITW?
- 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 1.3% for the next year implies demand will be shaky
- Free cash flow margin dropped by 1.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Illinois Tool Works’s stock price of $239.96 implies a valuation ratio of 23.1x forward P/E. Read our free research report to see why you should think twice about including ITW in your portfolio.
One Stock to Buy:
Amphenol (APH)
Market Cap: $112.3 billion
With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
Why Will APH Outperform?
- Market share has increased this cycle as its 15.2% annual revenue growth over the last two years was exceptional
- Massive revenue base of $16.78 billion makes it a well-known name that influences purchasing decisions
- Earnings per share have massively outperformed its peers over the last five years, increasing by 19% annually
Amphenol is trading at $91.12 per share, or 38.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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 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
