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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here are three S&P 500 stocks that don’t make the cut and some better choices instead.
Western Digital (WDC)
Market Cap: $51.36 billion
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Does WDC Give Us Pause?
- Annual sales declines of 9.4% for the past five years show its products and services struggled to connect with the market during this cycle
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 14.9%
- ROIC of 6.6% reflects management’s challenges in identifying attractive investment opportunities
Western Digital is trading at $149.56 per share, or 19x forward P/E. If you’re considering WDC for your portfolio, see our FREE research report to learn more.
Ingersoll Rand (IR)
Market Cap: $30.16 billion
Started with the invention of the steam drill, Ingersoll Rand (NYSE: IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.
Why Does IR Worry Us?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Anticipated sales growth of 5.5% for the next year implies demand will be shaky
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $76.33 per share, Ingersoll Rand trades at 21.5x forward P/E. Dive into our free research report to see why there are better opportunities than IR.
FedEx (FDX)
Market Cap: $59.89 billion
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE: FDX) is a global provider of parcel and cargo delivery services.
Why Is FDX Risky?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.4% for the last five years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
FedEx’s stock price of $253.82 implies a valuation ratio of 13.6x forward P/E. Check out our free in-depth research report to learn more about why FDX doesn’t pass our bar.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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