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.
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.
Workday (WDAY)
Market Cap: $67.44 billion
Founded by industry veterans Aneel Bushri and Dave Duffield after their former company PeopleSoft was acquired by Oracle in a hostile takeover, Workday (NASDAQ:WDAY) provides cloud-based software for organizations to manage and plan finance and human resources.
Why Do We Think Twice About WDAY?
- Sales trends were unexciting over the last three years as its 17.2% annual growth was below the typical software company
Workday is trading at $252.60 per share, or 7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than WDAY.
General Mills (GIS)
Market Cap: $29.99 billion
Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
Why Are We Cautious About GIS?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Forecasted revenue decline of 4.3% for the upcoming 12 months implies demand will fall off a cliff
General Mills’s stock price of $54.76 implies a valuation ratio of 12.9x forward P/E. If you’re considering GIS for your portfolio, see our FREE research report to learn more.
LKQ (LKQ)
Market Cap: $10.09 billion
A global distributor of vehicle parts and accessories, LKQ (NASDAQ:LKQ) offers its customers a comprehensive selection of high-quality, affordably priced automobile products.
Why Do We Think LKQ Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $38.15 per share, LKQ trades at 10.7x forward P/E. Read our free research report to see why you should think twice about including LKQ in your portfolio.
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 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.