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.
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 that don’t make the cut and some better choices instead.
Starbucks (SBUX)
Market Cap: $94.23 billion
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Do We Steer Clear of SBUX?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Estimated sales growth of 3.1% for the next 12 months implies demand will slow from its six-year trend
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 7.1 percentage points
Starbucks’s stock price of $82.75 implies a valuation ratio of 34.4x forward P/E. Dive into our free research report to see why there are better opportunities than SBUX.
United Parcel Service (UPS)
Market Cap: $78.75 billion
Trademarking its recognizable UPS Brown color, UPS (NYSE:UPS) offers package delivery, supply chain management, and freight forwarding services.
Why Should You Sell UPS?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
- Waning returns on capital imply its previous profit engines are losing steam
United Parcel Service is trading at $92.85 per share, or 13.5x forward P/E. Read our free research report to see why you should think twice about including UPS in your portfolio.
Citigroup (C)
Market Cap: $182 billion
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE:C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Why Are We Cautious About C?
- Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 5.9% for the last five years
- Estimated net interest income growth of 2.3% for the next 12 months implies demand will slow from its five-year trend
- Weak unit economics are reflected in its net interest margin of 2.4%, one of the worst among bank companies
At $101.85 per share, Citigroup trades at 0.9x forward P/B. To fully understand why you should be careful with C, check out our full research report (it’s free for active Edge members).
Stocks We Like More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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