While the S&P 500 (^GSPC) includes industry leaders, not every stock in the index is a winner. Some companies are past their prime, weighed down by poor execution, weak financials, or structural headwinds.
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.
J. M. Smucker (SJM)
Market Cap: $10.7 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 Is SJM Risky?
- Flat unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 11.4 percentage points
- Underwhelming 0.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
At $99.93 per share, J. M. Smucker trades at 9.8x forward P/E. If you’re considering SJM for your portfolio, see our FREE research report to learn more.
Nordson (NDSN)
Market Cap: $15.68 billion
Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.
Why Does NDSN Give Us Pause?
- 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
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.6%
- Waning returns on capital imply its previous profit engines are losing steam
Nordson is trading at $281.16 per share, or 24.5x forward P/E. Read our free research report to see why you should think twice about including NDSN in your portfolio.
Bank of America (BAC)
Market Cap: $360.4 billion
Tracing its roots back to 1784 and now serving approximately 67 million consumer and small business clients, Bank of America (NYSE: BAC) is a global financial institution that provides banking, investing, asset management, and risk management products and services to individuals, businesses, and governments.
Why Are We Cautious About BAC?
- Annual net interest income growth of 8.2% over the last five years lagged behind its banking peers as its large revenue base made it difficult to generate incremental demand
- Net interest margin of 2% reflects its high servicing and capital costs
- Estimated tangible book value per share growth of 5.8% for the next 12 months implies profitability will slow from its two-year trend
Bank of America’s stock price of $50.83 implies a valuation ratio of 1.3x forward P/B. To fully understand why you should be careful with BAC, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
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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.
