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.
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.
Ralph Lauren (RL)
Market cap: $22.75 billion
Originally founded as a necktie company, Ralph Lauren (NYSE: RL) is an iconic American fashion brand known for its classic and sophisticated style.
Why Do We Steer Clear of RL?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Poor expense management has led to an operating margin of 15.7% that is below the industry average
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Ralph Lauren’s stock price of $381.25 implies a valuation ratio of 20.5x forward P/E. If you’re considering RL for your portfolio, see our FREE research report to learn more.
FOX (FOXA)
Market cap: $26.85 billion
Founded in 1915, Fox (NASDAQ: FOXA) is a diversified media company, operating prominent cable news, television broadcasting, and digital media platforms.
Why Do We Think FOXA Will Underperform?
- Annual sales growth of 6.3% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Low free cash flow margin of 14.1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
FOX is trading at $66.70 per share, or 12.3x forward P/E. Read our free research report to see why you should think twice about including FOXA in your portfolio.
AIG (AIG)
Market cap: $41.96 billion
With roots dating back to 1919 when it began as a small insurance agency in Shanghai, China, AIG (NYSE: AIG) is a global insurance organization that provides commercial and personal insurance solutions to businesses and individuals across more than 200 countries.
Why Do We Pass on AIG?
- 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
- 5% annual declines in net premiums earned for the past five years indicates policy sales struggled this cycle
- Book value per share stagnated over the last five years, limiting its ability to leverage its balance sheet to make additional investments
At $80.88 per share, AIG trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than AIG.
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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
