3 S&P 500 Stocks Walking a Fine Line

The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.

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 to steer clear of and a few alternatives to consider.

Target (TGT)

Market Cap: $42.84 billion

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Why Are We Cautious About TGT?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its six-year trend
3. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 28%

Target’s stock price of $94.37 implies a valuation ratio of 11x forward P/E. To fully understand why you should be careful with TGT, check out our full research report (it’s free).

Rockwell Automation (ROK)

Market Cap: $34.44 billion

One of the first companies to address industrial automation, Rockwell Automation (NYSE:ROK) sells products that help customers extract more efficiency from their machinery.

Why Do We Pass on ROK?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Waning returns on capital imply its previous profit engines are losing steam

Rockwell Automation is trading at $305.54 per share, or 30.5x forward P/E. Read our free research report to see why you should think twice about including ROK in your portfolio.

Omnicom Group (OMC)

Market Cap: $14.27 billion

With a vast network of creative agencies that helped craft some of the most memorable ad campaigns in history, Omnicom Group (NYSE:OMC) is a strategic holding company that provides advertising, marketing, and communications services to many of the world's largest companies.

Why Do We Think Twice About OMC?

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. Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its two-year trend
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.6 percentage points

At $73.27 per share, Omnicom Group trades at 8.6x forward P/E. Dive into our free research report to see why there are better opportunities than OMC.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 176% over the last five years.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.