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.
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 that don’t make the cut and some better choices instead.
CSX (CSX)
Market cap: $95.77 billion
Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.
Why Are We Bearish on CSX?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Disappointing unit sales over the past two years imply it may need to invest in improvements to get back on track
- Efficiency has decreased over the last five years as its operating margin fell by 4.4 percentage points
CSX’s stock price of $51.85 implies a valuation ratio of 22.8x forward P/E. Read our free research report to see why you should think twice about including CSX in your portfolio.
Thermo Fisher (TMO)
Market cap: $258.2 billion
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE: TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Is TMO Not Exciting?
- Annual sales growth of 3.9% over the last five years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Flat earnings per share over the last five years lagged its peers
Thermo Fisher is trading at $695.14 per share, or 26.3x forward P/E. Check out our free in-depth research report to learn more about why TMO doesn’t pass our bar.
Travelers (TRV)
Market cap: $81.2 billion
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE: TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Why Are We Cautious About TRV?
- Outsized scale creates growth headwinds as its 3.1% annualized net premiums earned increases over the last two years underperformed other financial institutions
- Estimated sales growth of 1.8% for the next 12 months implies demand will slow from its two-year trend
- Sizable asset base leads to capital growth challenges as its 4.1% annual book value per share increases over the last five years fell short of other insurance companies
At $397.19 per share, Travelers trades at 2.7x forward P/B. Dive into our free research report to see why there are better opportunities than TRV.
Stocks we like more
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
