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. Keeping that in mind, here are three S&P 500 stocks to avoid and some better alternatives instead.
Akamai (AKAM)
Market Cap: $10.87 billion
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ: AKAM) provides software for organizations to efficiently deliver web content to their customers.
Why Do We Pass on AKAM?
- Muted 4.5% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Sky-high servicing costs result in an inferior gross margin of 59.1% that must be offset through increased usage
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
Akamai’s stock price of $74.06 implies a valuation ratio of 2.7x forward price-to-sales. To fully understand why you should be careful with AKAM, check out our full research report (it’s free).
Electronic Arts (EA)
Market Cap: $39.3 billion
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ: EA) is one of the world’s largest video game publishers.
Why Do We Think Twice About EA?
- 1.2% annual revenue growth over the last three years was slower than its consumer internet peers
- Anticipated sales growth of 2.1% for the next year implies demand will be shaky
- Efficiency has decreased over the last few years as its EBITDA margin fell by 6.1 percentage points
At $157.67 per share, Electronic Arts trades at 13.1x forward EV/EBITDA. Read our free research report to see why you should think twice about including EA in your portfolio.
Vulcan Materials (VMC)
Market Cap: $36.33 billion
Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Does VMC Give Us Pause?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Demand for its offerings was relatively low as its number of tons shipped has underwhelmed
- Gross margin of 25% is below its competitors, leaving less money to invest in areas like marketing and R&D
Vulcan Materials is trading at $274.94 per share, or 30.9x forward P/E. If you’re considering VMC for your portfolio, see our FREE research report to learn more.
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 9 Market-Beating Stocks. 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.
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