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.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that may struggle.
Two Stocks to Sell:
Waters Corporation (WAT)
Market Cap: $32.12 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 Are We Cautious About WAT?
- 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
- Day-to-day expenses have swelled relative to revenue over the last two years as its adjusted operating margin fell by 13.7 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Waters Corporation’s stock price of $324.44 implies a valuation ratio of 22.6x forward P/E. Read our free research report to see why you should think twice about including WAT in your portfolio.
Morgan Stanley (MS)
Market Cap: $279.5 billion
Founded in 1924 during the post-WWI economic boom by former JP Morgan partners, Morgan Stanley (NYSE: MS) is a global financial services firm that provides investment banking, wealth management, and investment management services to corporations, governments, institutions, and individuals.
Why Does MS Worry Us?
- Earnings per share lagged its peers over the last five years as they only grew by 9.3% annually
- Annual tangible book value per share growth of 3% over the last five years lagged behind its financials peers as its large balance sheet made it difficult to generate incremental capital growth
Morgan Stanley is trading at $176.07 per share, or 15x forward P/E. Dive into our free research report to see why there are better opportunities than MS.
One Stock to Buy:
Jack Henry (JKHY)
Market Cap: $11.46 billion
Founded in 1976 by two entrepreneurs who saw the need for specialized banking software in the early days of financial computing, Jack Henry & Associates (NASDAQ: JKHY) provides technology solutions that help banks and credit unions innovate, differentiate, and compete while serving the evolving needs of their accountholders.
Why Do We Love JKHY?
- Annual revenue growth of 7.6% over the last five years was above the sector average and underscores its products and services value to customers
- Additional sales over the last two years increased its profitability as the 16.8% annual growth in its earnings per share outpaced its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $158.74 per share, Jack Henry trades at 24.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
