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. That said, here are three S&P 500 stocks to avoid and some better alternatives instead.

Electronic Arts (EA)

Market Cap: $49.94 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 Does EA Fall Short?

1. Muted 1.2% annual revenue growth over the last three years shows its demand lagged behind its consumer internet peers
2. Projected sales growth of 2.7% for the next 12 months suggests sluggish demand
3. Day-to-day expenses have swelled relative to revenue over the last few years as its EBITDA margin fell by 6.1 percentage points

At $199.99 per share, Electronic Arts trades at 16.8x forward EV/EBITDA. If you’re considering EA for your portfolio, see our FREE research report to learn more.

Estée Lauder (EL)

Market Cap: $33.42 billion

Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.

Why Are We Wary of EL?

1. 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
2. Operating margin declined by 11.7 percentage points over the last year as its sales cratered
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 40.8% annually, worse than its revenue

Estée Lauder’s stock price of $93.01 implies a valuation ratio of 44.2x forward P/E. Read our free research report to see why you should think twice about including EL in your portfolio.

EPAM (EPAM)

Market Cap: $8.17 billion

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

Why Are We Hesitant About EPAM?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

EPAM is trading at $146.36 per share, or 12.6x forward P/E. Dive into our free research report to see why there are better opportunities than EPAM.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out 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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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