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.
Micron (MU)
Market Cap: $133.9 billion
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE: MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Why Are We Hesitant About MU?
- Gross margin of 21.8% reflects its high production costs
- Subpar operating margin of 4.1% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
At $119.26 per share, Micron trades at 13.7x forward P/E. If you’re considering MU for your portfolio, see our FREE research report to learn more.
Disney (DIS)
Market Cap: $214.8 billion
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Do We Think DIS Will Underperform?
- Annual sales growth of 3.7% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Projected 5.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Underwhelming 5.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
Disney’s stock price of $119 implies a valuation ratio of 21.6x forward P/E. Read our free research report to see why you should think twice about including DIS in your portfolio.
KeyCorp (KEY)
Market Cap: $17.46 billion
Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE: KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states.
Why Is KEY Not Exciting?
- Net interest income stagnated over the last four years and signal the need for new growth strategies
- Efficiency ratio improvement of 37.1 percentage points over the last four years shows the company optimized its expenses
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 19.9% annually, worse than its revenue
KeyCorp is trading at $15.89 per share, or 1x forward P/B. To fully understand why you should be careful with KEY, check out our full research report (it’s free).
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 Tecnoglass (+1,754% 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
