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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here are three S&P 500 stocks to avoid and some better alternatives instead.
Home Depot (HD)
Market Cap: $360.5 billion
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Why Are We Cautious About HD?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Estimated sales growth of 1.5% for the next 12 months implies demand will slow from its six-year trend
- Free cash flow margin shrank by 2.5 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
At $362.44 per share, Home Depot trades at 23.7x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio.
Live Nation (LYV)
Market Cap: $33.61 billion
Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.
Why Does LYV Give Us Pause?
- Demand for its offerings was relatively low as its number of events has underwhelmed
- Poor expense management has led to an operating margin of 4.1% that is below the industry average
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 1.9 percentage points
Live Nation is trading at $145.01 per share, or 61.9x forward P/E. To fully understand why you should be careful with LYV, check out our full research report (it’s free).
3M (MMM)
Market Cap: $79.45 billion
Producers of the first asthma inhaler, 3M Company (NYSE:MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.
Why Is MMM Risky?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share have dipped by 3.4% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3M’s stock price of $147.65 implies a valuation ratio of 18.9x forward P/E. Dive into our free research report to see why there are better opportunities than MMM.
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 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 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.