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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here is one S&P 500 stock that is positioned to outperform and two that could be in trouble.
Two stocks to sell:
Lockheed Martin (LMT)
Market cap: $143.9 billion
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Why Is LMT Not Exciting?
- Annual sales growth of 3.6% over the last five years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
- Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
- Eroding returns on capital suggest its historical profit centers are aging
Lockheed Martin is trading at $623.25 per share, or 19.9x forward P/E. Read our free research report to see why you should think twice about including LMT in your portfolio.
FactSet (FDS)
Market cap: $10.91 billion
Founded in 1978 when financial data was still primarily delivered through paper reports, FactSet (NYSE: FDS) provides financial data, analytics, and technology solutions that investment professionals use to research, analyze, and manage their portfolios.
Why Does FDS Fall Short?
- Annual revenue growth of 6% over the last two years was below our standards for the financials sector
- Performance over the past two years shows its incremental sales were less profitable, as its 4.7% annual earnings per share growth trailed its revenue gains
At $309.60 per share, FactSet trades at 16.5x forward P/E. Dive into our free research report to see why there are better opportunities than FDS.
One stock to watch:
Leidos (LDOS)
Market cap: $17.52 billion
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Are We Fans of LDOS?
- Sales pipeline is in good shape as its backlog averaged 15.9% growth over the past two years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 16.8% exceeded its revenue gains over the last two years
- Free cash flow margin expanded by 6.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Leidos’s stock price of $140.15 implies a valuation ratio of 11.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks we like even more
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
