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.
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 that don’t make the cut and some better choices instead.
Lockheed Martin (LMT)
Market Cap: $126.5 billion
Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.
Why Should You Sell LMT?
- The company has faced growth challenges as its 2.6% annual revenue increases over the last five years fell short of other industrials companies
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 3.7% annually while its revenue grew
- Eroding returns on capital suggest its historical profit centers are aging
At $547.48 per share, Lockheed Martin trades at 17.2x forward P/E. Read our free research report to see why you should think twice about including LMT in your portfolio.
Northrop Grumman (NOC)
Market Cap: $78.48 billion
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Why Is NOC Risky?
- The company has faced growth challenges as its 2.6% annual revenue increases over the last five years fell short of other industrials companies
- Estimated sales growth of 5.4% for the next 12 months is soft and implies weaker demand
- Earnings per share lagged its peers over the last five years as they only grew by 3.1% annually
Northrop Grumman’s stock price of $553.75 implies a valuation ratio of 19.1x forward P/E. If you’re considering NOC for your portfolio, see our FREE research report to learn more.
NVR (NVR)
Market Cap: $17.49 billion
Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.
Why Do We Pass on NVR?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Earnings per share fell by 7.5% annually over the last two years while its revenue was flat, showing each sale was less profitable
- Diminishing returns on capital suggest its earlier profit pools are drying up
NVR is trading at $6,470 per share, or 16.7x forward P/E. To fully understand why you should be careful with NVR, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
