The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
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 leading the market forward and two best left off your watchlist.
Two Stocks to Sell:
Nike (NKE)
Market Cap: $66.15 billion
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Are We Out on NKE?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Free cash flow margin is expected to increase by 1.6 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $44.52 per share, Nike trades at 27.2x forward P/E. To fully understand why you should be careful with NKE, check out our full research report (it’s free).
Sherwin-Williams (SHW)
Market Cap: $75.79 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Does SHW Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.1% over the last two years was below our standards for the industrials sector
- Estimated sales growth of 4.4% for the next 12 months is soft and implies weaker demand
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5% annually
Sherwin-Williams is trading at $308.94 per share, or 26.1x forward P/E. Read our free research report to see why you should think twice about including SHW in your portfolio.
One Stock to Watch:
Cadence Design Systems (CDNS)
Market Cap: $103 billion
Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.
Why Is CDNS on Our Radar?
- Superior software functionality and low servicing costs are reflected in its best-in-class gross margin of 87.1%
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Cadence Design Systems’s stock price of $372.81 implies a valuation ratio of 15.4x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
