StockStory has identified three S&P 500 components it advises investors to avoid due to deteriorating financials and structural headwinds. The firm points to onsemi, Cummins, and Delta Air Lines as names where execution and growth metrics have failed to meet expectations, raising questions about their long-term viability within the broader index.
onsemi (NASDAQ:ON), a global provider of analog chips specializing in autos, industrial applications, and power management, faces concerns rooted in recent revenue trends. The company, which was spun out of Motorola in 1999 and built through acquisitions, reported annual sales declines of 10.8% for the past two years. StockStory notes that these declines suggest the company's products struggled to connect with the market during this cycle. Looking ahead, Wall Street estimates imply tepid growth of 12.8% over the next 12 months. Additionally, onsemi's operating margin fell by 16.9 percentage points over the last five years as day-to-day expenses swelled relative to revenue. The stock currently trades at $73.29 per share, representing a forward P/E of 18.5x.
Cummins (NYSE:CMI), a major supplier of engines and power systems that once powered more than half of the heavy-duty truck market, presents a different set of challenges. StockStory highlights that Cummins' sales stagnated over the last two years, signaling a need for new growth strategies. The company's gross margin stands at 24.8%, which the firm attributes to high production costs. A critical concern is Cummins' lack of free cash flow generation, which limits its ability to reinvest for growth, repurchase shares, or distribute capital to shareholders. At $527.70 per share, Cummins trades at a forward P/E of 16.2x.
Delta Air Lines (NYSE:DAL), one of the US 'Big Four' airlines serving both business and leisure travelers globally, is the third stock on StockStory's caution list. The firm argues that Delta's passenger mile volume has underperformed expectations recently, pointing to soft demand for its services. Projected free cash flow margins indicate that the carrier is unlikely to enhance its cash conversion capabilities in the coming year. Furthermore, StockStory points to diminishing returns on capital from an already low starting point, implying that neither management's prior nor current strategic bets are yielding expected results. Delta shares trade at $74.73, with a forward P/E of 11.4x.
StockStory frames these selections against a backdrop where the market is rapidly separating quality stocks from expensive ones. The firm cites its AI system's previous identification of Palantir before it ran 1,662% between October 2022 and February 2026, and AppLovin before it ran 753% between February 2024 and February 2026. Nvidia was also flagged before it ran 1,178% between January 2023 and February 2026. StockStory states that each week it produces six new names that pass specific tests, noting that stocks on its list in 2020 include Nvidia (+1,460% between June 2020 and June 2025) and Kadant (+214% between June 2020 and June 2025).