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.
Picking the right S&P 500 stocks requires more than just buying big names, and that’s where StockStory comes in. That said, here are three S&P 500 stocks to avoid and some better alternatives instead.
Starbucks (SBUX)
Market Cap: $112.8 billion
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Why Do We Avoid SBUX?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.8 percentage points
- Performance over the past six years shows its incremental sales were much less profitable, as its earnings per share fell by 5.9% annually
At $98.94 per share, Starbucks trades at 39.9x forward P/E. Dive into our free research report to see why there are better opportunities than SBUX.
News Corp (NWSA)
Market Cap: $13.27 billion
Established in 2013 after a restructuring, News Corp (NASDAQ: NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Are We Out on NWSA?
- Sales were flat over the last five years, indicating it’s failed to expand its business
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7.3% for the last two years
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
News Corp’s stock price of $22.74 implies a valuation ratio of 21.2x forward P/E. If you’re considering NWSA for your portfolio, see our FREE research report to learn more.
Old Dominion Freight Line (ODFL)
Market Cap: $41.01 billion
With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ: ODFL) delivers less-than-truckload (LTL) and full-container load freight.
Why Are We Cautious About ODFL?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Earnings per share have dipped by 7.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Old Dominion Freight Line is trading at $196.11 per share, or 40.8x forward P/E. Read our free research report to see why you should think twice about including ODFL in your portfolio.
High-Quality Stocks for All Market Conditions
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The names generating the next wave of massive growth are right here 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).
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