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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
Tapestry (TPR)
Market Cap: $22.44 billion
Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Are We Hesitant About TPR?
- Lackluster 1.6% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 3.3% for the next 12 months suggests sluggish demand
At $108.03 per share, Tapestry trades at 21x forward P/E. Check out our free in-depth research report to learn more about why TPR doesn’t pass our bar.
Norwegian Cruise Line (NCLH)
Market Cap: $11.42 billion
With amenities like a full go-kart race track built into its ships, Norwegian Cruise Line (NYSE: NCLH) is a premier global cruise company.
Why Does NCLH Fall Short?
- Sluggish trends in its passenger cruise days suggest customers aren’t adopting its solutions as quickly as the company hoped
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Norwegian Cruise Line’s stock price of $25.42 implies a valuation ratio of 11.4x forward P/E. If you’re considering NCLH for your portfolio, see our FREE research report to learn more.
Danaher (DHR)
Market Cap: $141.2 billion
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Why Does DHR Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.9% annually over the last two years
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.9 percentage points
Danaher is trading at $197 per share, or 24.4x forward P/E. Dive into our free research report to see why there are better opportunities than DHR.
High-Quality Stocks for All Market Conditions
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 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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