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. Keeping that in mind, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
Skyworks Solutions (SWKS)
Market Cap: $10.42 billion
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Why Do We Think SWKS Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 12.2% annually over the last two years
- Projected sales decline of 8.5% over the next 12 months indicates demand will continue deteriorating
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 19.2 percentage points
At $69.60 per share, Skyworks Solutions trades at 17.6x forward P/E. To fully understand why you should be careful with SWKS, check out our full research report (it’s free).
Mondelez (MDLZ)
Market Cap: $85.64 billion
Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Is MDLZ Not Exciting?
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 7 percentage points
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 1.3 percentage points
- Underwhelming 8% return on capital reflects management’s difficulties in finding profitable growth opportunities
Mondelez is trading at $66.02 per share, or 21.9x forward P/E. Check out our free in-depth research report to learn more about why MDLZ doesn’t pass our bar.
Allegion (ALLE)
Market Cap: $12.16 billion
Allegion plc (NYSE: ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Why Do We Think Twice About ALLE?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.5 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
Allegion’s stock price of $141.31 implies a valuation ratio of 18x forward P/E. Dive into our free research report to see why there are better opportunities than ALLE.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
