While the S&P 500 (^GSPC) includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds.
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.
Palo Alto Networks (PANW)
Market Cap: $114.2 billion
Founded in 2005 by cybersecurity engineer Nir Zuk, Palo Alto Networks (NASDAQ:PANW) makes hardware and software cybersecurity products that protect companies from cyberattacks, breaches, and malware threats.
Why Are We Hesitant About PANW?
- Sales trends were unexciting over the last three years as its 19.7% annual growth was below the typical software company
- Average billings growth of 3% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
Palo Alto Networks is trading at $171.56 per share, or 12x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PANW.
Align Technology (ALGN)
Market Cap: $9.99 billion
Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ:ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments.
Why Does ALGN Fall Short?
- Disappointing clear aligner shipments over the past two years indicate demand is soft and that the company may need to revise its strategy
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7.5 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
At $138.14 per share, Align Technology trades at 12.7x forward P/E. Read our free research report to see why you should think twice about including ALGN in your portfolio.
Quest (DGX)
Market Cap: $19.28 billion
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE:DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Why Do We Think Twice About DGX?
- Annual sales growth of 5.3% over the last two years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 11.1 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Quest’s stock price of $172.44 implies a valuation ratio of 17.1x forward P/E. Check out our free in-depth research report to learn more about why DGX doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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).
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.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.