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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. Keeping that in mind, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
J. M. Smucker (SJM)
Market Cap: $10.89 billion
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Do We Think SJM Will Underperform?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Efficiency has decreased over the last year as its operating margin fell by 22.2 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging
J. M. Smucker’s stock price of $103.26 implies a valuation ratio of 10.5x forward P/E. If you’re considering SJM for your portfolio, see our FREE research report to learn more.
Masco (MAS)
Market Cap: $14.64 billion
Headquartered just outside of Detroit, MI, Masco (NYSE:MAS) designs and manufactures home-building products such as glass shower doors, decorative lighting, bathtubs, and faucets.
Why Do We Steer Clear of MAS?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 2% for the next 12 months is soft and implies weaker demand
- Waning returns on capital imply its previous profit engines are losing steam
Masco is trading at $70.47 per share, or 17.2x forward P/E. Check out our free in-depth research report to learn more about why MAS doesn’t pass our bar.
AIG (AIG)
Market Cap: $39.35 billion
With roots dating back to 1919 when it began as a small insurance agency in Shanghai, China, AIG (NYSE:AIG) is a global insurance organization that provides commercial and personal insurance solutions to businesses and individuals across more than 200 countries.
Why Do We Avoid AIG?
- 5.8% annual declines in net premiums earned for the past five years indicates policy sales struggled this cycle
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 1% annually
- Products and services are facing profitability challenges during this cycle, as seen in its flat book value per share over the last five years
At $73.03 per share, AIG trades at 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than AIG.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.