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 to steer clear of and a few alternatives to consider.
General Dynamics (GD)
Market Cap: $91.85 billion
Creator of the famous M1 Abrahms tank, General Dynamics (NYSE: GD) develops aerospace, marine systems, combat systems, and information technology products.
Why Does GD Worry Us?
- The company has faced growth challenges as its 6.9% annual revenue increases over the last five years fell short of other industrials companies
- Estimated sales growth of 3.8% for the next 12 months implies demand will slow from its two-year trend
- 2.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
General Dynamics is trading at $342.21 per share, or 20.4x forward P/E. Dive into our free research report to see why there are better opportunities than GD.
IBM (IBM)
Market Cap: $209 billion
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
Why Does IBM Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.5% over the last five years was below our standards for the business services sector
- Estimated sales growth of 4.8% for the next 12 months is soft and implies weaker demand
- Earnings per share lagged its peers over the last five years as they only grew by 6.7% annually
IBM’s stock price of $222.40 implies a valuation ratio of 17.7x forward P/E. If you’re considering IBM for your portfolio, see our FREE research report to learn more.
PNC Financial Services Group (PNC)
Market Cap: $85.64 billion
Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE: PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.
Why Do We Think Twice About PNC?
- The company has faced growth challenges as its 8.8% annual net interest income increases over the last five years fell short of other banking companies
- Weak unit economics are reflected in its net interest margin of 2.8%, one of the worst among bank companies
- Large asset base makes it harder to grow tangible book value per share quickly, and its annual tangible book value per share growth of 2.8% over the last five years was below our standards for the banking sector
At $210.03 per share, PNC Financial Services Group trades at 1.4x forward P/B. To fully understand why you should be careful with PNC, 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 for 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 (+1,326% between June 2020 and June 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.
