The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
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 could deliver good returns and two that may struggle.
Two Stocks to Sell:
Sherwin-Williams (SHW)
Market Cap: $85.33 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?
- 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 3% for the last two years
- Estimated sales growth of 5.2% 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 4.5% annually
At $352.31 per share, Sherwin-Williams trades at 27.1x forward P/E. Read our free research report to see why you should think twice about including SHW in your portfolio.
Cisco (CSCO)
Market Cap: $435.7 billion
Founded in 1984 by a husband and wife team who wanted computers at Stanford to talk to computers at UC Berkeley, Cisco (NASDAQ: CSCO) designs and sells networking equipment, security solutions, and collaboration tools that help businesses connect their systems and secure their digital operations.
Why Are We Cautious About CSCO?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.9% over the last five years was below our standards for the business services sector
- Free cash flow margin dropped by 4.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Cisco’s stock price of $110.91 implies a valuation ratio of 21.9x forward P/E. To fully understand why you should be careful with CSCO, check out our full research report (it’s free).
One Stock to Watch:
Pfizer (PFE)
Market Cap: $161 billion
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE: PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Are We Fans of PFE?
- Enormous revenue base of $63.7 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
- Adjusted operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
- Industry-leading 17.5% return on capital demonstrates management’s skill in finding high-return investments
Pfizer is trading at $28.12 per share, or 9.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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.
