When a New S&P 500 Member Shows Up With 50%+ Margins

You know that feeling when that scrappy kid gets invited to the big party and suddenly everyone notices? That’s today’s vibe.

A mobile ad powerhouse just joined the index, analysts are tripping over themselves to raise targets, and momentum traders are circling.

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Eversource Energy | ES

Price: $67.67

Utilities aren’t supposed to be interesting, yet here we are.

Shares are up double digits year-to-date, but the stock has lagged the broader utilities ETF and remains below recent highs. 

The setup is a classic “de-risk and refocus” story: ES has been slimming down non-core assets (like offshore wind exposure), shoring up the balance sheet, and leaning into its regulated electric, gas, and water businesses across New England.

Rates matter here. With the Fed beginning to trim, the headwind on income-oriented sectors eases.

If the 10-year drifts lower into year-end, high-dividend, rate-sensitive names can look better on a relative basis, especially those with clear capital plans and constructive regulatory relationships.

Why it matters to you: ES isn’t trying to be flashy. It’s a yield + slow-and-steady rate base compounder.

If you want offense, look elsewhere. If you want ballast with a 4%+ dividend while the rate backdrop slowly improves, this stays on the shortlist.

Synopsys | SNPS

Price: $514.54

This one’s the whiplash chart of the month.

The stock cratered after a rough post-merger print and guidance reset tied to China export noise, IP segment weakness, and a foundry customer wobble.

The 35% air pocket wiped out most of 2025’s gains in a session and spooked anyone who thought EDA tools were macro-proof.

Two thoughts. First, the strategic logic of Synopsys + Ansys still makes sense: a richer “silicon-to-systems” stack should drive cross-sell and stickier customer workflows as chip designs get denser and thermal/EM constraints bite.

Second, integration costs and divestitures take time, and China sentiment can swing quickly. That’s friction, not a broken thesis.

The tell into 2026 will be (1) how fast management stabilizes IP and rebuilds China confidence, (2) tangible synergy capture and margin rebuild, and (3) early customer wins for integrated simulation + EDA bundles.

Why it matters to you: If you’re long-term and can handle near-term chop, this pullback is the kind of bruise that often ages well. assuming execution tightens.

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FactSet Research Systems | FDS

Price: $295.60

It’s been a tough tape. The stock has slid hard on cautious guidance and a chorus of notes warning about AI-driven competition compressing margins.

The business still executes, organic ASV was fine, revenue topped, but the Street is laser-focused on what the next leg of growth looks like as gen-AI commoditizes “good enough” data/analytics for more users.

The silver lining: management’s pipeline commentary wasn’t doom-and-gloom, and FDS is investing to modernize the platform.

The overhang is time and spend; reinvestment dents margins before it pays back. 

If you own it, the question is whether you believe FactSet can bundle curated data, workflow, and governance in a way that free/cheap AI can’t.

I think there’s room for both, but the rerating likely takes steady quarters and evidence that pricing power holds.

Why it matters for you: Valuation is no longer heroic after the drawdown. If the company shows two clean quarters of ASV acceleration with stable margins, the stock should find its footing.

Lennar | LEN

Price: $121.91

Homebuilding is still all about rates and incentives.

Lennar’s quarter landed soft: revenue down, EPS nearly cut in half, and gross margins compressed as the company leaned on pricing to keep volumes moving.

Deliveries held up, so demand isn’t falling off a cliff, it’s just more elastic at higher mortgage rates.

The wildcard is how quickly 30-year mortgage rates drift lower into 2026 as the Fed keeps trimming. Even modest relief helps affordability and can reduce the need for heavy incentives.

That said, Lennar’s own outlook suggests more of the same near-term: stable deliveries, stable margins, and ASPs that reflect an aggressive “move product” strategy.

Berkshire’s stake gives a vote of confidence, but investors will want to see margins stabilize before paying up again.

Why it matters for you: If you’re constructive on rates easing and the economy staying out of a deep slowdown, LEN still screens inexpensive on forward earnings with optionality back to prior highs.

If rates stall out, patience required.

AppLovin | APP

Price: $643.43

If you’ve felt like this name’s been everywhere, it’s because the fundamentals and the story are finally rhyming.

The company just got added to the S&P 500, which tends to pull in a wave of passive-buying demand and raise the brand’s profile with big institutions.

On top of that, analysts keep stepping up their price targets, leaning into non-gaming expansion, e-commerce tie-ins, and international growth.

Under the hood, the business is throwing off elite-level profitability for a software platform, with EBIT north of 50% and EBITDA near 60%.

That’s rare air in ad tech and helps justify a premium multiple as long as growth keeps coming. 

Yes, the stock already had a monster run this year and the P/E looks nosebleed at first glance, but the mix shift toward high-margin software and broader use cases beyond games is what the bulls are paying up for.

Why it matters for you: For now, momentum plus margin is a powerful combo.

There’s early read-throughs from index inclusion flows, whether non-gaming revenue keeps taking share, and any signs of fatigue in user acquisition spend across apps and retailers.

Today’s mix is a micro-tour of what this market is rewarding: durable margins (APP), cleaner balance sheets (ES), credible execution through change (SNPS), sticky platforms that justify premium pricing (FDS), and operating discipline while you wait for macro to help (LEN).

You don’t need to swing at every pitch, just the ones where the risk/reward still tilts your way after the latest headline.

Stat of the Day: 22,000
The Nasdaq cracked 22,000 for the first time last week and stacked five more record closes. It’s doubled over five years and more than quadrupled over ten.

Multiple expansion + earnings growth are still doing the heavy lifting for tech, even with higher rates than the last cycle.

You should keep an eye on breadth as the index climbs, because leadership matters when heights get nosebleed-y.