1 S&P 500 Stock on Our Buy List and 2 We Ignore

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?

1. 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
2. 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
3. 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?

1. Earnings per share lagged its peers over the last five years as they only grew by 9.3% annually
2. 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?

1. 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
2. Additional sales over the last two years increased its profitability as the 16.8% annual growth in its earnings per share outpaced its revenue
3. 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.