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?
- ARR has dropped by 12.3% over the last year, suggesting it lost long-term deals and renewals
- Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its two-year trend
- 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?
- 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
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 4.2% annually
- 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?
- 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
- Share buybacks catapulted its annual earnings per share growth to 27.6%, which outperformed its revenue gains over the last two years
- 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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