2 S&P 500 stocks for long-term investors and 1 we avoid

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.

Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here are two S&P 500 stocks leading the market forward and one that could be in trouble.

One stock to sell:

Walmart (WMT)

Market cap: $979.9 billion

Known for its large-format Supercenters, Walmart (NASDAQ:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Are We Hesitant About WMT?

1. The company has faced growth challenges as its 5.3% annual revenue increases over the last three years fell short of other consumer retail companies

2. Gross margin of 24.9% is below its competitors, leaving less money for marketing and promotions

3. Poor expense management has led to an operating margin of 4.3% that is below the industry average

Walmart is trading at $123.52 per share, or 40.4x forward P/E. Dive into our free research report to see why there are better opportunities than WMT .

Two stocks to buy:

Monolithic Power Systems (MPWR)

Market cap: $59.12 billion

Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ:MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.

Why Are We Bullish on MPWR?

1. Impressive 27.6% annual revenue growth over the last five years indicates it's winning market share this cycle

2. Additional sales over the last five years increased its profitability as the 29.9% annual growth in its earnings per share outpaced its revenue

3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

Monolithic Power Systems's stock price of $1,216 implies a valuation ratio of 28.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it's free .

Ross Stores (ROST)

Market cap: $72.92 billion

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Why Is ROST a Top Pick?

1. New store openings and solid same-store sales performance have boosted its top-line growth

2. Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.1% growth over the past two years

3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it's making even more lucrative bets