1 S&P 500 Stock with Competitive Advantages and 2 We Brush Off

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 that may struggle.

Two Stocks to Sell:

Akamai Technologies (AKAM)

Market Cap: $12.55 billion

With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ:AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.

Why Should You Sell AKAM?

1. Muted 5.1% annual revenue growth over the last two years shows its demand lagged behind its software peers
2. Gross margin of 59.1% reflects its high servicing costs
3. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment

At $87.25 per share, Akamai Technologies trades at 2.9x forward price-to-sales. If you’re considering AKAM for your portfolio, see our FREE research report to learn more.

Fastenal (FAST)

Market Cap: $46.07 billion

Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.

Why Does FAST Give Us Pause?

1. 4.8% annual revenue growth over the last two years was slower than its industrials peers
2. Incremental sales over the last two years were less profitable as its 3.7% annual earnings per share growth lagged its revenue gains
3. Free cash flow margin dropped by 1.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Fastenal’s stock price of $40.19 implies a valuation ratio of 34x forward P/E. Dive into our free research report to see why there are better opportunities than FAST.

One Stock to Watch:

Xylem (XYL)

Market Cap: $33.16 billion

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Why Could XYL Be a Winner?

1. Annual revenue growth of 14.8% over the past two years was outstanding, reflecting market share gains this cycle
2. Offerings are difficult to replicate at scale and lead to a premier gross margin of 37.7%
3. Earnings per share grew by 17.7% annually over the last five years, massively outpacing its peers

Xylem is trading at $136.98 per share, or 25.1x 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 .

Stocks We Like Even More

Check out the high-quality names we’ve flagged 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-small-cap company Comfort Systems (+782% 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.