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 steer clear of and a few alternatives to consider.
Home Depot (HD)
Market Cap: $318 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 Hesitant About HD?
- The company has faced growth challenges as its 2.3% annual revenue increases over the last three years fell short of other consumer retail companies
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 33.2% is below its competitors, leaving less money for marketing and promotions
Home Depot is trading at $318.86 per share, or 21x forward P/E. To fully understand why you should be careful with HD, check out our full research report (it’s free).
Snap-on (SNA)
Market Cap: $19.6 billion
Founded in 1920, Snap-on (NYSE: SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.
Why Is SNA Not Exciting?
- 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
- Flat earnings per share over the last two years underperformed the sector average
- Waning returns on capital imply its previous profit engines are losing steam
Snap-on’s stock price of $378.45 implies a valuation ratio of 3.8x forward price-to-sales. Read our free research report to see why you should think twice about including SNA in your portfolio.
Regions Financial (RF)
Market Cap: $24.39 billion
Tracing its roots back to 1971 and operating in a region known as the "heart of Dixie," Regions Financial (NYSE: RF) is a financial holding company that provides banking services, wealth management, and specialty financial solutions across the South, Midwest, and Texas.
Why Does RF Worry Us?
- Net interest income trends were unexciting over the last five years as its 5.2% annual growth was below the typical banking firm
- Estimated net interest income growth of 3% for the next 12 months implies demand will slow from its five-year trend
- Earnings per share lagged its peers over the last two years as they only grew by 8.6% annually
At $28.58 per share, Regions Financial trades at 1.3x forward P/B. Check out our free in-depth research report to learn more about why RF doesn’t pass our bar.
Stocks We Like More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
