1 S&P 500 Stock to Keep an Eye On 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.

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

Two Stocks to Sell:

Lennar (LEN)

Market Cap: $29.95 billion

One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Why Do We Pass on LEN?

1. Backlog has dropped by 15.1% on average over the past two years, suggesting it’s losing orders as competition picks up
2. Free cash flow margin shrank by 9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Eroding returns on capital suggest its historical profit centers are aging

At $121.32 per share, Lennar trades at 18.1x forward P/E. To fully understand why you should be careful with LEN, check out our full research report (it’s free).

Agilent (A)

Market Cap: $35.58 billion

Originally spun off from Hewlett-Packard in 1999 as its measurement and analytical division, Agilent Technologies (NYSE:A) provides analytical instruments, software, services, and consumables for laboratory workflows in life sciences, diagnostics, and applied chemical markets.

Why Is A Not Exciting?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.9 percentage points

Agilent is trading at $125.81 per share, or 21.2x forward P/E. Read our free research report to see why you should think twice about including A in your portfolio.

One Stock to Watch:

Blackstone (BX)

Market Cap: $101.7 billion

With over $1 trillion in assets under management and investments spanning real estate, private equity, credit, and hedge funds, Blackstone (NYSE:BX) is a global alternative asset manager that invests capital on behalf of pension funds, sovereign wealth funds, and other institutional investors.

Why Is BX Interesting?

1. Annual revenue growth of 16.4% over the last two years was superb and indicates its market share increased during this cycle
2. Incremental sales over the last two years boosted profitability as its annual earnings per share growth of 18.7% outstripped its revenue performance

Blackstone’s stock price of $129.75 implies a valuation ratio of 20.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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