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. Keeping that in mind, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
Adobe (ADBE)
Market Cap: $147.5 billion
Originally named after Adobe Creek that ran behind co-founder John Warnock's house, Adobe (NASDAQ: ADBE) develops software products used for digital content creation, document management, and marketing solutions across desktop, mobile, and cloud platforms.
Why Are We Cautious About ADBE?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 12.6% underwhelmed
- Projected sales growth of 9.4% for the next 12 months suggests sluggish demand
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
Adobe’s stock price of $352.44 implies a valuation ratio of 5.7x forward price-to-sales. To fully understand why you should be careful with ADBE, check out our full research report (it’s free for active Edge members).
Home Depot (HD)
Market Cap: $343.4 billion
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Why Are We Hesitant About HD?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Gross margin of 33.4% is an output of its commoditized inventory
- Earnings per share fell by 3.3% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
At $344.90 per share, Home Depot trades at 23.2x forward P/E. Dive into our free research report to see why there are better opportunities than HD.
Hewlett Packard Enterprise (HPE)
Market Cap: $32.8 billion
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Do We Think Twice About HPE?
- Annual sales growth of 4.9% over the last five years lagged behind its business services peers as its large revenue base made it difficult to generate incremental demand
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 5.5% annually while its revenue grew
- 10.5 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
Hewlett Packard Enterprise is trading at $24.69 per share, or 10.4x forward P/E. Read our free research report to see why you should think twice about including HPE in your portfolio.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-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.
