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.
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 to avoid and some better alternatives instead.
Analog Devices (ADI)
Market Cap: $143.9 billion
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Are We Wary of ADI?
- Annual sales declines of 5.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Low returns on capital reflect management’s struggle to allocate funds effectively
Analog Devices’s stock price of $293.33 implies a valuation ratio of 30.5x forward P/E. Read our free research report to see why you should think twice about including ADI in your portfolio.
Disney (DIS)
Market Cap: $201.4 billion
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Should You Dump DIS?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 7.6% for the last five years
- Subpar operating margin of 14.5% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Free cash flow margin is not anticipated to grow over the next year
At $113.00 per share, Disney trades at 17.5x forward P/E. To fully understand why you should be careful with DIS, check out our full research report (it’s free).
Centene (CNC)
Market Cap: $22.8 billion
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Do We Think Twice About CNC?
- Customer growth was choppy over the past two years, suggesting that increasing competition is causing challenges in landing new contracts
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 5.1% annually
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Centene is trading at $46.14 per share, or 19.4x forward P/E. Check out our free in-depth research report to learn more about why CNC doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
