The S&P 500’s recent impressive gains have been disproportionately driven by the “Magnificent Seven” technology titans: Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta, and Tesla. While these companies have delivered exceptional returns, their dominance has created an imbalanced market narrative that potentially blinds investors to other opportunities.
The index actually contains nearly 500 other companies spanning diverse industries—many running profitable, sustainable businesses that simply don’t generate headline-grabbing coverage. This market dynamic creates potential opportunities for investors willing to conduct thorough research beyond the most popular names.
Validea’s comprehensive screening system, which integrates 22 different investment methodologies, has identified ten S&P 500 companies with strong fundamental characteristics. This analytical framework incorporates time-tested principles from legendary investors:
- Warren Buffett’s focus on durable competitive advantages and robust capital returns
- Peter Lynch’s emphasis on reasonable valuations relative to growth
- Benjamin Graham’s insistence on maintaining a margin of safety
While these companies may lack the spotlight enjoyed by major tech players, they demonstrate excellence across critical metrics: consistent cash flow generation, strong balance sheets, defensible market positions, and attractive valuations relative to intrinsic worth. These qualities suggest they may deliver solid long-term performance, even without constant media attention.
Here are the top 10 most fundamentally sound stocks within the index using our guru models as of March of 2025.
| Ticker | Company Name | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Price/ Cash Flow | Dividend Yield | Long-Term EPS Growth |
|---|---|---|---|---|---|---|---|---|---|---|
| PAYC | PAYCOM SOFTWARE INC | $203.62 | $11,400 | 22.9 | 6.1 | 73 | 7.2 | 17.6 | 0.7% | 32.7% |
| PHM | PULTEGROUP INC | $108.27 | $21,920 | 7.4 | 1.2 | 54 | 1.8 | 6.9 | 0.9% | 26.2% |
| RJF | RAYMOND JAMES FINANCIAL INC | $143.84 | $29,474 | 14.0 | 1.9 | 75 | 0.8 | 12.7 | 1.3% | 20.2% |
| CVX | CHEVRON CORP | $152.95 | $269,284 | 15.8 | 1.4 | 63 | 1.8 | 7.7 | 4.3% | 26.3% |
| JPM | JPMORGAN CHASE & CO | $246.54 | $689,352 | 12.5 | 3.9 | 82 | 2.1 | 10.6 | 1.9% | 13.5% |
| CTRA | COTERRA ENERGY INC | $25.51 | $19,494 | 11.2 | 1.1 | 54 | 1.4 | 7.6 | 2.0% | 13.1% |
| WRB | W R BERKLEY CORP | $62.17 | $23,576 | 14.3 | 1.7 | 71 | 2.8 | 13.4 | 0.4% | 26.9% |
| XOM | EXXON MOBIL CORP | $107.62 | $466,979 | 13.7 | 1.4 | 61 | 1.8 | 8.0 | 3.6% | 15.4% |
| NVR | NVR INC | $7,494.92 | $22,413 | 14.8 | 2.1 | 54 | 5.4 | 13.2 | 0.0% | 18.6% |
| TMUS | T-MOBILE US INC | $262.95 | $300,222 | 27.2 | 3.7 | 89 | 4.9 | 12.4 | 1.1% | 41.7% |
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