2 S&P 500 Stocks for Long-Term Investors, and 1 We Turn Down

The portfolio call: ADP and Comfort Systems beat Republic Services

Out of these three S&P 500 names, the call is straightforward: own ADP and Comfort Systems, pass on Republic Services. This is not about market timing. It is about where investors get the best mix of durability, execution, and room for compounding at today's starting point.

Why ADP still earns a place

ADP still has the scale and recurring demand of a business that processes one out of every six paychecks in the U.S. Its latest full-year results showed 7% revenue growth to $21.95 billion, while management also highlighted broad-based growth in earnings, client retention, and AI-enabled product adoption. For large-cap investors, that steady profile matters more than hype.

Why Comfort Systems is still compelling

Comfort Systems belongs in the buy column for a different reason. It is the more cyclical, execution-driven name in the group, and the main attraction is demand visibility. If the company can keep converting its backlog into revenue and earnings, it may still have room to compound rather than plateau.

Why Republic Services gets dropped

Republic Services is still a strong operator, but the setup is less attractive. The company has posted only 4.7% revenue growth over the last two years, flat unit sales over the same period point to softer demand, and the stock carries 29.4x forward P/E on anticipated sales growth of just 4.4% for next year. For long-term investors, that looks like a more fragile risk/reward.

ADP's appeal is durability, not speed

ADP does not need to be exciting to be a good long-term holding. The better reason to keep it on the buy list is that the earnings engine is still improving. In fiscal 2026, net earnings rose 8% while adjusted EBIT margin expanded 80 basis points to 26.8%, and adjusted diluted EPS increased 11%. That suggests ADP is still extracting more profit from each sales dollar, not just defending scale.

Scale is still helping margins

ADP is huge, with $21.95 billion in revenue. That size gives it room to spread technology, compliance, and service infrastructure across a broad client base. When sales grow, that fixed-cost base can support modest operating leverage, so steady growth can still translate into stronger earnings power.

The moat is switching friction

ADP's moat is not excitement. It is switching friction. Payroll and HR platforms touch pay cycles, tax filings, benefits, compliance, and deeply embedded workflows. That makes them harder to replace than many investors give credit for. In this case, boring durability is part of the thesis.

Cash generation remains strong, with a minor caveat

ADP still produces excellent cash flow, even if one quarter is not perfect. In Q2, free-cash-flow margin was 24.8%, down from 27.4% a year earlier. The broader quality picture still looks healthy, but the move is a useful reminder that even high-quality businesses can have small quarter-to-quarter wobbles.

Comfort Systems has demand visibility, but the evidence needs to stay current

Comfort Systems is the more cyclical choice in this group. Its appeal is not sticky software usage; it is the chance that backlog can keep supporting revenue growth and earnings execution.

Backlog is the key point of attraction

The main evidence is the company's backlog trend. According to the source material, Comfort Systems has benefited from 56% average backlog growth over the past two years. If that backlog continues to convert into reported results, the business may still have room to compound in a sector many investors otherwise treat as mature.

Valuation raises the execution bar

There is also a valuation hurdle. The recent reference price for the stock was $168.76, which suggests the market is not treating Comfort Systems as an overlooked name. That works in the bull case if backlog turns into sustained revenue and profit growth. It becomes a problem faster if execution slips.

What to verify next

Before making this a fully confident call, investors should verify the latest filings to confirm that backlog growth is still translating into reported results and supporting profitability. If that link holds, Comfort Systems remains interesting. If it weakens, the setup becomes less compelling.

Republic Services is a good business, but the investment case is less convincing

Republic Services is not being rejected because it is a bad company. It is being turned down because a good business can still be a mediocre investment when growth has slowed and valuation remains rich.

The slowdown matters more than the scale

Republic's scale is real, and so is the slowdown. The company has posted only 4.7% revenue growth over the last two years, and flat unit sales over the same period suggest demand has softened. Revenue can be helped by pricing or mix for a while; unit volume is usually a cleaner read on underlying activity.

What would improve the setup

Until the growth picture improves or valuation becomes more attractive, Republic looks like a high-quality business in a slower part of the market. For investors choosing among these three names today, that is not enough to clear the bar.