3 S&P 500 Stocks We Think Twice About

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. That said, here are three S&P 500 stocks to avoid and some better alternatives instead.

Boeing (BA)

Market Cap: $150.2 billion

One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE:BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.

Why Do We Pass on BA?

1. Weak unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Negative free cash flow raises questions about the return timeline for its investments
3. EBITDA losses may force it to accept punitive lending terms or high-cost debt

At $197.45 per share, Boeing trades at 151.3x forward P/E. Check out our free in-depth research report to learn more about why BA doesn’t pass our bar.

Vulcan Materials (VMC)

Market Cap: $37.67 billion

Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.

Why Does VMC Fall Short?

1. Number of tons shipped has disappointed over the past two years, indicating weak demand for its offerings
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.4%
3. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.2%

Vulcan Materials’s stock price of $287.14 implies a valuation ratio of 30.1x forward P/E. Read our free research report to see why you should think twice about including VMC in your portfolio.

Aflac (AFL)

Market Cap: $58.3 billion

Known for its iconic duck mascot that has quacked "Aflac!" in commercials since 2000, Aflac (NYSE:AFL) provides supplemental health and life insurance policies that pay cash benefits directly to policyholders for expenses not covered by their primary insurance.

Why Do We Avoid AFL?

1. 6.1% annual declines in net premiums earned for the past five years indicates policy sales struggled this cycle
2. Earnings per share lagged its peers over the last two years as they only grew by 9.4% annually
3. Projected book value per share decline of 1.1% for the next 12 months points to tough credit quality challenges ahead

Aflac is trading at $112.83 per share, or 2.1x forward P/B. If you’re considering AFL for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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