The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
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 avoid and some better alternatives instead.
Skyworks Solutions (SWKS)
Market Cap: $10.48 billion
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Why Do We Pass on SWKS?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last two years
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 19.6 percentage point drop in the company’s operating margin
At $68.95 per share, Skyworks Solutions trades at 14.5x forward P/E. Dive into our free research report to see why there are better opportunities than SWKS.
CDW (CDW)
Market Cap: $17.09 billion
Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ:CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.
Why Are We Wary of CDW?
- The company has faced growth challenges as its 3.6% annual revenue increases over the last five years fell short of other business services companies
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend
- Incremental sales over the last two years were less profitable as its 3.8% annual earnings per share growth lagged its revenue gains
CDW is trading at $136.86 per share, or 12x forward P/E. If you’re considering CDW for your portfolio, see our FREE research report to learn more.
Capital One (COF)
Market Cap: $136.5 billion
Starting as a credit card company in 1988 before expanding into a full-service bank, Capital One (NYSE:COF) is a financial services company that offers credit cards, auto loans, banking services, and commercial lending to consumers and businesses.
Why Does COF Worry Us?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 4.4% annually
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.6% annually over the last five years
- Low return on equity reflects management’s struggle to allocate funds effectively
Capital One’s stock price of $223.22 implies a valuation ratio of 10x forward P/E. To fully understand why you should be careful with COF, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.