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. 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:
Autodesk (ADSK)
Market Cap: $43.34 billion
Starting with AutoCAD in the 1980s and evolving into a comprehensive design ecosystem, Autodesk (NASDAQ: ADSK) provides software solutions for architecture, engineering, construction, manufacturing, and entertainment industries to design, simulate, and visualize projects.
Why Does ADSK Give Us Pause?
- 14% annual revenue growth over the last five years was slower than its software peers
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
At $205.85 per share, Autodesk trades at 5.1x forward price-to-sales. To fully understand why you should be careful with ADSK, check out our full research report (it’s free).
Illinois Tool Works (ITW)
Market Cap: $79.67 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 Are We Hesitant About ITW?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales growth of 3.1% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last two years as they only grew by 3.1% annually
Illinois Tool Works is trading at $272.13 per share, or 24.1x forward P/E. Read our free research report to see why you should think twice about including ITW in your portfolio.
One Stock to Watch:
Waters Corporation (WAT)
Market Cap: $37.55 billion
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Why Does WAT Stand Out?
- Annual revenue growth of 13.9% over the last two years beat the sector average and underscores the unique value of its offerings
- Exciting sales outlook for the upcoming 12 months calls for 80.2% growth, an acceleration from its two-year trend
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Waters Corporation’s stock price of $381.25 implies a valuation ratio of 24.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
