2 S&P 500 Stocks Worth Your Attention and 1 We Turn Down

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.

Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here are two S&P 500 stocks positioned to outperform and one best left off your watchlist.

One Stock to Sell:

Zimmer Biomet (ZBH)

Market Cap: $17.58 billion

With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE:ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries.

Why Are We Hesitant About ZBH?

1. 3.8% annual revenue growth over the last five years was slower than its healthcare peers
2. 1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $88.95 per share, Zimmer Biomet trades at 10.6x forward P/E. If you’re considering ZBH for your portfolio, see our FREE research report to learn more.

Two Stocks to Buy:

Lam Research (LRCX)

Market Cap: $209 billion

Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.

Why Should You Buy LRCX?

1. Impressive 11.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Free cash flow margin increased by 9.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Lam Research is trading at $166.40 per share, or 34x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

Trane Technologies (TT)

Market Cap: $96.12 billion

With low-pressure heating systems as its first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Why Are We Bullish on TT?

1. Annual revenue growth of 11.1% over the past five years was outstanding, reflecting market share gains this cycle
2. Share buybacks catapulted its annual earnings per share growth to 21.4%, which outperformed its revenue gains over the last two years
3. Industry-leading 24.3% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities

Trane Technologies’s stock price of $433.50 implies a valuation ratio of 30.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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