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.

Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. That said, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.

Illinois Tool Works (ITW)

Market Cap: $72.38 billion

Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE: ITW) manufactures engineered components and specialized equipment for numerous industries.

Why Does ITW Worry Us?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Anticipated sales growth of 3.7% for the next year implies demand will be shaky
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.2% annually

Illinois Tool Works’s stock price of $248.20 implies a valuation ratio of 23x forward P/E. Dive into our free research report to see why there are better opportunities than ITW.

Gilead Sciences (GILD)

Market Cap: $144.9 billion

From its groundbreaking work in developing the first single-tablet regimens for HIV treatment, Gilead Sciences (NASDAQ: GILD) develops and markets innovative medicines for life-threatening diseases including HIV, viral hepatitis, COVID-19, and cancer.

Why Do We Think Twice About GILD?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.7% over the last two years was below our standards for the healthcare sector
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Gilead Sciences is trading at $116.60 per share, or 13.9x forward P/E. To fully understand why you should be careful with GILD, check out our full research report (it’s free for active Edge members).

Solventum (SOLV)

Market Cap: $12.45 billion

Founded in 1985, Solventum (NYSE: SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.

Why Does SOLV Fall Short?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Forecasted revenue decline of 4.5% for the upcoming 12 months implies demand will fall off a cliff
3. Free cash flow margin shrank by 15.7 percentage points over the last four years, suggesting the company is consuming more capital to stay competitive

At $71.80 per share, Solventum trades at 11.9x forward P/E. If you’re considering SOLV for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. 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).

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