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.
Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
Palo Alto Networks (PANW)
Market Cap: $131.4 billion
Founded in 2005 by cybersecurity engineer Nir Zuk, Palo Alto Networks (NASDAQ: PANW) makes hardware and software cybersecurity products that protect companies from cyberattacks, breaches, and malware threats.
Why Is PANW Not Exciting?
- Revenue increased by 19.7% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 3% underwhelmed
Palo Alto Networks is trading at $196 per share, or 13.8x forward price-to-sales. Check out our free in-depth research report to learn more about why PANW doesn’t pass our bar.
Boeing (BA)
Market Cap: $160.9 billion
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE: BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Do We Avoid BA?
- Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $214.22 per share, Boeing trades at 30.3x forward EV-to-EBITDA. To fully understand why you should be careful with BA, check out our full research report (it’s free).
International Paper (IP)
Market Cap: $24.98 billion
Established in 1898, International Paper (NYSE: IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.
Why Do We Think IP Will Underperform?
- Annual sales declines of 2.1% for the past five years show its products and services struggled to connect with the market during this cycle
- 11.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
International Paper’s stock price of $47.31 implies a valuation ratio of 7.1x forward EV-to-EBITDA. If you’re considering IP for your portfolio, see our FREE research report to learn more.
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 6 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
