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.
Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here are three S&P 500 stocks that don’t make the cut and some better choices instead.
Cummins (CMI)
Market Cap: $45.93 billion
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE: CMI) offers engines and power systems.
Why Does CMI Fall Short?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6% for the last two years
- 10.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Eroding returns on capital suggest its historical profit centers are aging
Cummins is trading at $333.44 per share, or 11.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including CMI in your portfolio.
Expeditors (EXPD)
Market Cap: $16.31 billion
Expeditors (NYSE: EXPD) offers air and ocean freight as well as brokerage services.
Why Are We Out on EXPD?
- Annual sales declines of 14.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
At $119.07 per share, Expeditors trades at 21.9x forward P/E. If you’re considering EXPD for your portfolio, see our FREE research report to learn more.
Incyte (INCY)
Market Cap: $13.2 billion
Founded in 1991 and evolving from a genomics research firm to a commercial-stage drug developer, Incyte (NASDAQ: INCY) is a biopharmaceutical company that discovers, develops, and commercializes proprietary therapeutics for cancer and inflammatory diseases.
Why Does INCY Worry Us?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 15.2 percentage points
- 13.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital suggest its earlier profit pools are drying up
Incyte’s stock price of $71.19 implies a valuation ratio of 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than INCY.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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