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.
GoDaddy (GDDY)
Market Cap: $25.6 billion
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
Why Do We Think Twice About GDDY?
- Average ARR growth of 7.8% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
- Projected sales growth of 7.1% for the next 12 months suggests sluggish demand
- Gross margin of 64% reflects its relatively high servicing costs
GoDaddy is trading at $179.67 per share, or 5.2x forward price-to-sales. If you’re considering GDDY for your portfolio, see our FREE research report to learn more.
Align Technology (ALGN)
Market Cap: $13.11 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 Worry Us?
- Weak clear aligner shipments over the past two years imply it may need to invest in improvements to get back on track
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.6 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
At $180.93 per share, Align Technology trades at 17.7x forward P/E. To fully understand why you should be careful with ALGN, check out our full research report (it’s free).
Gartner (IT)
Market Cap: $32.44 billion
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Does IT Give Us Pause?
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.3% annually
Gartner’s stock price of $421.53 implies a valuation ratio of 33.9x forward P/E. Dive into our free research report to see why there are better opportunities than IT.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.