The S&P 500 (^GSPC) is packed with companies that have built dominant market positions, making it a core index for investors. A select few continue to innovate and expand, setting themselves up for long-term success.
Identifying the best companies in the S&P 500 isn’t always easy, and that’s why we started StockStory. Keeping that in mind, here are three S&P 500 stocks that could deliver good returns.
Lam Research (LRCX)
Market Cap: $432.7 billion
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Will LRCX Outperform?
- Market share has increased this cycle as its 24.8% annual revenue growth over the last two years was exceptional
- Highly efficient business model is illustrated by its impressive 33.8% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- ROIC punches in at 64.2%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
Lam Research’s stock price of $346.39 implies a valuation ratio of 36.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
O'Reilly (ORLY)
Market Cap: $67.87 billion
Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.
Why Will ORLY Beat the Market?
- Comparable store sales rose by 4.9% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 19.4%
- Industry-leading 42.2% return on capital demonstrates management’s skill in finding high-return investments
O'Reilly is trading at $83.98 per share, or 24.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Xylem (XYL)
Market Cap: $23.91 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 Does XYL Stand Out?
- Annual revenue growth of 11.9% over the past five years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 16.3% to outpace its revenue gains
- Free cash flow margin jumped by 7.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $102.59 per share, Xylem trades at 17.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
