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.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here are three S&P 500 stocks that don’t make the cut and some better choices instead.
Dollar Tree (DLTR)
Market Cap: $22.08 billion
A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ: DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.
Why Does DLTR Worry Us?
- Annual revenue declines of 11.8% over the last three years indicate problems with its market positioning
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 36.4% that must be offset through higher volumes
- Low returns on capital reflect management’s struggle to allocate funds effectively
Dollar Tree’s stock price of $120.99 implies a valuation ratio of 17x forward P/E. To fully understand why you should be careful with DLTR, check out our full research report (it’s free).
Tractor Supply (TSCO)
Market Cap: $16.39 billion
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ: TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Why Are We Hesitant About TSCO?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.6% over the last three years was below our standards for the consumer retail sector
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Gross margin of 36.4% is below its competitors, leaving less money for marketing and promotions
At $32.27 per share, Tractor Supply trades at 14.6x forward P/E. Dive into our free research report to see why there are better opportunities than TSCO.
Royal Caribbean (RCL)
Market Cap: $77.23 billion
Established in 1968, Royal Caribbean Cruises (NYSE: RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.
Why Should You Sell RCL?
- Number of passenger cruise days has disappointed over the past two years, indicating weak demand for its offerings
- Free cash flow margin is expected to increase by 1.2 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Low returns on capital reflect management’s struggle to allocate funds effectively
Royal Caribbean is trading at $307.28 per share, or 18.1x forward P/E. Read our free research report to see why you should think twice about including RCL in your portfolio.
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.
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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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
