1 S&P 500 Stock on Our Watchlist and 2 We Avoid

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.

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 is positioned to outperform and two that may struggle.

Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 (NASDAQ:FFIV) provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.

Why Do We Think Twice About FFIV?

Products, pricing, or go-to-market strategy may need some adjustments as its 11.3% average billings growth over the last year was weak

Estimated sales growth of 7.6% for the next 12 months implies demand will slow from its two-year trend

Static operating margin over the last year shows it couldn't become more efficient

F5 is trading at $458.74 per share, or 7.3x forward price-to-sales. To fully understand why you should be careful with FFIV, check out our full research report (it's free).

Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products as well as displays and package protection.

Underwhelming unit sales over the past two years suggest it might have to lower prices to accelerate growth

Earnings per share have dipped by 1.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Eroding returns on capital suggest its historical profit centers are aging

Packaging Corporation of America's stock price of $229.36 implies a valuation ratio of 19.7x forward P/E. If you're considering PKG for your portfolio, see our FREE research report to learn more.

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a variety of products and services to the aerospace and defense industries.

Average organic revenue growth of 10.5% over the past two years demonstrates its ability to expand independently without relying on acquisitions

Share repurchases over the last five years enabled its annual earnings per share growth of 16.3% to outpace its revenue gains

Free cash flow margin grew by 5.2 percentage points over the last five years, giving the company more chips to play with

At $184.60 per share, RTX trades at 25.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free.

WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.