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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. That said, here are two S&P 500 stocks positioned to outperform and one best left off your watchlist.

One Stock to Sell:

Mohawk Industries (MHK)

Market Cap: $6.76 billion

Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.

Why Do We Steer Clear of MHK?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

2. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Mohawk Industries’s stock price of $108.17 implies a valuation ratio of 10.6x forward P/E. If you’re considering MHK for your portfolio, see our FREE research report to learn more.

Two Stocks to Buy:

Chipotle (CMG)

Market Cap: $70.49 billion

Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.

Why Are We Backing CMG?

1. Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth

2. Same-store sales growth averaged 6.2% over the past two years, showing it’s bringing new and repeat diners into its restaurants

3. Enormous revenue base of $11.49 billion provides significant leverage in supplier negotiations

Chipotle is trading at $51.85 per share, or 39.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Super Micro (SMCI)

Market Cap: $27.54 billion

Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ:SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.

Why Are We Bullish on SMCI?

1. Impressive 81.1% annual revenue growth over the last two years indicates it’s winning market share this cycle

2. Massive revenue base of $21.57 billion makes it a well-known name that influences purchasing decisions

3. Improving returns on capital reflect management’s ability to monetize investments