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.
Illinois Tool Works (ITW)
Market Cap: $72.38 billion
Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE:ITW) manufactures engineered components and specialized equipment for numerous industries.
Why Does ITW Worry Us?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 3.7% for the next year implies demand will be shaky
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.2% annually
Illinois Tool Works’s stock price of $248.20 implies a valuation ratio of 23x forward P/E. Dive into our free research report to see why there are better opportunities than ITW.
Gilead Sciences (GILD)
Market Cap: $144.9 billion
From its groundbreaking work in developing the first single-tablet regimens for HIV treatment, Gilead Sciences (NASDAQ:GILD) develops and markets innovative medicines for life-threatening diseases including HIV, viral hepatitis, COVID-19, and cancer.
Why Do We Think Twice About GILD?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.7% over the last two years was below our standards for the healthcare sector
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Gilead Sciences is trading at $116.60 per share, or 13.9x forward P/E. To fully understand why you should be careful with GILD, check out our full research report (it’s free for active Edge members).
Solventum (SOLV)
Market Cap: $12.45 billion
Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.
Why Does SOLV Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Forecasted revenue decline of 4.5% for the upcoming 12 months implies demand will fall off a cliff
- Free cash flow margin shrank by 15.7 percentage points over the last four years, suggesting the company is consuming more capital to stay competitive
At $71.80 per share, Solventum trades at 11.9x forward P/E. If you’re considering SOLV for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-small-cap company Exlservice (+354% 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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