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. Keeping that in mind, here are three S&P 500 stocks to avoid and some better alternatives instead.
Hormel Foods (HRL)
Market Cap: $12.28 billion
Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Should You Sell HRL?
- Shrinking unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Gross margin of 16.6% is an output of its commoditized products
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 7% annually, worse than its revenue
Hormel Foods’s stock price of $22.52 implies a valuation ratio of 16.4x forward P/E. Check out our free in-depth research report to learn more about why HRL doesn’t pass our bar.
Cummins (CMI)
Market Cap: $64.21 billion
With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.
Why Does CMI Give Us Pause?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Projected sales growth of 1.2% for the next 12 months suggests sluggish demand
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Cummins is trading at $461.45 per share, or 19.8x forward P/E. Read our free research report to see why you should think twice about including CMI in your portfolio.
3M (MMM)
Market Cap: $87.44 billion
Producers of the first asthma inhaler, 3M Company (NYSE:MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.
Why Is MMM Risky?
- 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
- Sales are projected to be flat over the next 12 months and imply weak demand
- Earnings per share have contracted by 1.5% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
At $164.99 per share, 3M trades at 19.5x forward P/E. If you’re considering MMM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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