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.
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 leading the market forward and two best left off your watchlist.
Two Stocks to Sell:
Teradyne (TER)
Market Cap: $30.57 billion
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Why Are We Wary of TER?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.1% annually over the last five years
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 15.1 percentage point drop in the company’s operating margin
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 6.6% annually, worse than its revenue
Teradyne’s stock price of $195.69 implies a valuation ratio of 37.4x forward P/E. To fully understand why you should be careful with TER, check out our full research report (it’s free for active Edge members).
Waters Corporation (WAT)
Market Cap: $22.51 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 Do We Think Twice About WAT?
- Annual revenue growth of 1.8% over the last two years was below our standards for the healthcare sector
- 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
- Eroding returns on capital suggest its historical profit centers are aging
Waters Corporation is trading at $380.13 per share, or 27x forward P/E. Read our free research report to see why you should think twice about including WAT in your portfolio.
One Stock to Buy:
TransDigm (TDG)
Market Cap: $71.91 billion
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.
Why Are We Bullish on TDG?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 12% over the past two years
- Additional sales over the last two years increased its profitability as the 20.2% annual growth in its earnings per share outpaced its revenue
- Robust free cash flow margin of 19.6% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
At $1,277 per share, TransDigm trades at 32.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
