The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
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.
Clorox (CLX)
Market Cap: $13.15 billion
Founded in 1913 with bleach as the sole product offering, Clorox (NYSE: CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.
Why Does CLX Worry Us?
- Annual revenue declines of 1.5% over the last three years indicate problems with its market positioning
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Projected sales for the next 12 months are flat and suggest demand will be subdued
Clorox’s stock price of $109.88 implies a valuation ratio of 16.9x forward P/E. Check out our free in-depth research report to learn more about why CLX doesn’t pass our bar.
Carnival (CCL)
Market Cap: $33.2 billion
Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE: CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.
Why Do We Think CCL Will Underperform?
- Number of passenger cruise days has disappointed over the past two years, indicating weak demand for its offerings
- Poor free cash flow margin of 7.6% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Negative returns on capital show management lost money while trying to expand the business
At $23.89 per share, Carnival trades at 10.5x forward P/E. If you’re considering CCL for your portfolio, see our FREE research report to learn more.
Cummins (CMI)
Market Cap: $74.44 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 Give Us Pause?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 24.6%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Cummins is trading at $539.45 per share, or 21.1x forward P/E. Read our free research report to see why you should think twice about including CMI in your portfolio.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
