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. That said, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
Veralto (VLTO)
Market Cap: $24.49 billion
Spun off from Danaher in 2023, Veralto (NYSE:VLTO) provides water analytics and treatment solutions.
Why Is VLTO Not Exciting?
- Muted 4.6% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Projected sales growth of 6.7% for the next 12 months suggests sluggish demand
Veralto is trading at $100.48 per share, or 22.3x forward P/E. To fully understand why you should be careful with VLTO, check out our full research report (it’s free).
D.R. Horton (DHI)
Market Cap: $37.85 billion
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE:DHI) builds a variety of new construction homes across multiple markets.
Why Are We Out on DHI?
- Backlog has dropped by 3.6% on average over the past two years, suggesting it’s losing orders as competition picks up
- Earnings per share have dipped by 16% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $135.56 per share, D.R. Horton trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including DHI in your portfolio.
CooperCompanies (COO)
Market Cap: $11.06 billion
With a history dating back to 1958 and a portfolio spanning two distinct healthcare segments, Cooper Companies (NASDAQ:COO) develops and manufactures medical devices focused on vision care through contact lenses and women's health including fertility products and services.
Why Are We Wary of COO?
- 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
- Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its two-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
CooperCompanies’s stock price of $58.17 implies a valuation ratio of 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than COO.
Stocks We Like More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.