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. Keeping that in mind, here are three S&P 500 stocks to avoid and some better alternatives instead.
Conagra (CAG)
Market Cap: $9.35 billion
Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE:CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.
Why Is CAG Risky?
- Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Forecasted revenue decline of 3.5% for the upcoming 12 months implies demand will fall off a cliff
- Underwhelming 5.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
Conagra’s stock price of $19.55 implies a valuation ratio of 8x forward P/E. To fully understand why you should be careful with CAG, check out our full research report (it’s free).
Pool (POOL)
Market Cap: $12.34 billion
Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ:POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.
Why Do We Steer Clear of POOL?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Free cash flow margin is forecasted to shrink by 2.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Diminishing returns on capital suggest its earlier profit pools are drying up
Pool is trading at $329.48 per share, or 28.9x forward P/E. Dive into our free research report to see why there are better opportunities than POOL.
U.S. Bancorp (USB)
Market Cap: $72.53 billion
With roots dating back to 1863 and a presence across 26 states primarily in the Midwest and West, U.S. Bancorp (NYSE:USB) is one of America's largest banks providing lending, deposit services, wealth management, payment processing, and merchant services to individuals and businesses.
Why Does USB Give Us Pause?
- Large revenue base makes it harder to expand quickly, and its annual net interest income growth of 4.9% over the last five years was below our standards for the banking sector
- Weak unit economics are reflected in its net interest margin of 2.7%, 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% over the last five years was below our standards for the banking sector
At $46.41 per share, U.S. Bancorp trades at 1.3x forward P/B. Check out our free in-depth research report to learn more about why USB doesn’t pass our bar.
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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
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