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.

Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here is one S&P 500 stock that is positioned to outperform and two best left off your watchlist.

Two Stocks to Sell:

F5 (FFIV)

Market Cap: $14.31 billion

Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 (NASDAQ: FFIV) provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.

Why Does FFIV Fall Short?

1. ARR has dropped by 12.3% over the last year, suggesting it lost long-term deals and renewals
2. Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its two-year trend
3. Operating margin expanded by 1.4 percentage points over the last year as it scaled and became more efficient

F5 is trading at $247.11 per share, or 4.6x forward price-to-sales. To fully understand why you should be careful with FFIV, check out our full research report (it’s free for active Edge members).

IBM (IBM)

Market Cap: $292 billion

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

Why Does IBM Worry Us?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 1.3% for the last five years
2. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 4.2% annually
3. ROIC of 11.7% reflects management’s challenges in identifying attractive investment opportunities

IBM’s stock price of $313.40 implies a valuation ratio of 25.9x forward P/E. If you’re considering IBM for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Leidos (LDOS)

Market Cap: $24.9 billion

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Why Do We Like LDOS?

1. Backlog has averaged 15.2% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
2. Share buybacks catapulted its annual earnings per share growth to 27.6%, which outperformed its revenue gains over the last two years
3. Free cash flow margin grew by 3.3 percentage points over the last five years, giving the company more chips to play with

At $194.76 per share, Leidos trades at 16.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

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 6 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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