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.

Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here are three S&P 500 stocks that don’t make the cut and some better choices instead.

Analog Devices (ADI)

Market Cap: $109.5 billion

Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.

Why Does ADI Fall Short?

1. Sales tumbled by 12.7% annually over the last two years, showing market trends are working against its favor during this cycle
2. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.3 percentage points
3. Underwhelming 6.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam

Analog Devices is trading at $220 per share, or 28.1x forward P/E. To fully understand why you should be careful with ADI, check out our full research report (it’s free).

Dollar Tree (DLTR)

Market Cap: $24.14 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 Are We Hesitant About DLTR?

1. Annual sales growth of 1.1% over the last six years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand
2. Forecasted revenue decline of 21.7% for the upcoming 12 months implies demand will fall off a cliff
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam

Dollar Tree’s stock price of $115.61 implies a valuation ratio of 21.4x forward P/E. Dive into our free research report to see why there are better opportunities than DLTR.

Teledyne (TDY)

Market Cap: $25.89 billion

Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE: TDY) offers digital imaging and instrumentation products for various industries.

Why Are We Wary of TDY?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.5 percentage points
3. Low returns on capital reflect management’s struggle to allocate funds effectively

At $552.16 per share, Teledyne trades at 24.5x forward P/E. Read our free research report to see why you should think twice about including TDY in your portfolio.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.

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