1 S&P 500 Stock with Solid Fundamentals and 2 We Avoid
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. That said, here is one S&P 500 stock that could deliver good returns and two best left off your watchlist.
Two Stocks to Sell:
Skyworks Solutions (SWKS)
Market Cap: $11.52 billion
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Why Are We Out on SWKS?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last two years
- Sales are projected to be flat over the next 12 months and imply weak demand
- Operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
Skyworks Solutions’s stock price of $76.31 implies a valuation ratio of 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than SWKS.
Sysco (SYY)
Market Cap: $38.88 billion
Powering more than 730,000 commercial kitchens across North America and Europe, Sysco (NYSE:SYY) is a global food distributor that supplies restaurants, healthcare facilities, schools, hotels, and other foodservice establishments with food products and related services.
Why Do We Steer Clear of SYY?
- Average unit sales growth of 0.9% over the past two years reflects steady demand for its products
- Free cash flow margin is projected to show no improvement next year
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Sysco is trading at $78.13 per share, or 15.5x forward P/E. If you’re considering SYY for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Lennox (LII)
Market Cap: $12.1 billion
Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Why Could LII Be a Winner?
- Healthy operating margin of 17.7% shows it’s a well-run company with efficient processes, and its profits increased over the last five years as it scaled
- Free cash flow margin increased by 8.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Industry-leading 37.3% return on capital demonstrates management’s skill in finding high-return investments
At $350.87 per share, Lennox trades at 14.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.