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 avoid and some better alternatives instead.

Hormel Foods (HRL)

Market Cap: $12.28 billion

Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.

Why Should You Sell HRL?

1. Shrinking unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Gross margin of 16.6% is an output of its commoditized products
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 7% annually, worse than its revenue

Hormel Foods’s stock price of $22.52 implies a valuation ratio of 16.4x forward P/E. Check out our free in-depth research report to learn more about why HRL doesn’t pass our bar.

Cummins (CMI)

Market Cap: $64.21 billion

With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE: CMI) offers engines and power systems.

Why Does CMI Give Us Pause?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Projected sales growth of 1.2% for the next 12 months suggests sluggish demand
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Cummins is trading at $461.45 per share, or 19.8x forward P/E. Read our free research report to see why you should think twice about including CMI in your portfolio.

3M (MMM)

Market Cap: $87.44 billion

Producers of the first asthma inhaler, 3M Company (NYSE: MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.

Why Is MMM Risky?

1. 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
2. Sales are projected to be flat over the next 12 months and imply weak demand
3. Earnings per share have contracted by 1.5% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

At $164.99 per share, 3M trades at 19.5x forward P/E. If you’re considering MMM for your portfolio, see our FREE research report to learn more.

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 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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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