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. Keeping that in mind, here are three S&P 500 stocks that don’t make the cut and some better choices instead.
Dayforce (DAY)
Market Cap: $9.53 billion
Founded in 1992 as Ceridian, an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Dayforce (NYSE: DAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.
Why Does DAY Give Us Pause?
- Sales trends were unexciting over the last three years as its 18.7% annual growth was below the typical software company
- Gross margin of 50.3% reflects its high servicing costs
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.4 percentage points
Dayforce’s stock price of $59.60 implies a valuation ratio of 4.9x forward price-to-sales. Read our free research report to see why you should think twice about including DAY in your portfolio.
Ralph Lauren (RL)
Market Cap: $16.34 billion
Originally founded as a necktie company, Ralph Lauren (NYSE: RL) is an iconic American fashion brand known for its classic and sophisticated style.
Why Are We Wary of RL?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 3.9% for the next 12 months suggests sluggish demand
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2.7 percentage points over the next year
Ralph Lauren is trading at $264.55 per share, or 20.3x forward P/E. Dive into our free research report to see why there are better opportunities than RL.
Vulcan Materials (VMC)
Market Cap: $35.98 billion
Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Does VMC Worry Us?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Sluggish trends in its tons shipped suggest customers aren’t adopting its solutions as quickly as the company hoped
- Free cash flow margin dropped by 5.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $272.36 per share, Vulcan Materials trades at 32.5x forward P/E. Check out our free in-depth research report to learn more about why VMC doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
