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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two best left off your watchlist.
Two Stocks to Sell:
Sherwin-Williams (SHW)
Market Cap: $78.78 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 Hesitant About SHW?
- Annual sales growth of 1.1% over the last two years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.2%
- Earnings per share lagged its peers over the last two years as they only grew by 5.2% annually
Sherwin-Williams is trading at $319.89 per share, or 26.7x forward P/E. Check out our free in-depth research report to learn more about why SHW doesn’t pass our bar.
Mettler-Toledo (MTD)
Market Cap: $23.86 billion
With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE: MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.
Why Is MTD Not Exciting?
- Annual revenue growth of 3.1% over the last two years was below our standards for the healthcare sector
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Eroding returns on capital suggest its historical profit centers are aging
Mettler-Toledo’s stock price of $1,172 implies a valuation ratio of 25.1x forward P/E. Dive into our free research report to see why there are better opportunities than MTD.
One Stock to Watch:
AMETEK (AME)
Market Cap: $49.13 billion
Started from its humble beginnings in motor repair, AMETEK (NYSE: AME) manufactures electronic devices used in industries like aerospace, power, and healthcare.
Why Is AME on Our Radar?
- Solid 10.3% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Healthy operating margin of 25.1% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Strong free cash flow margin of 21.5% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
At $215.39 per share, AMETEK trades at 26.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
