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.
Even among blue-chip stocks, not all investments are created equal - which is why we built StockStory to help you navigate the market. Keeping that in mind, here are three S&P 500 stocks to steer clear of and a few alternatives to consider.
NXP Semiconductors (NXPI)
Market Cap: $76.39 billion
Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.
Why Does NXPI Fall Short?
- Annual sales declines of 2.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Anticipated sales growth of 14.6% for the next year implies demand will be shaky
At $315.53 per share, NXP Semiconductors trades at 19.6x forward P/E. Check out our free in-depth research report to learn more about why NXPI doesn’t pass our bar.
Rockwell Automation (ROK)
Market Cap: $50.92 billion
One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.
Why Are We Cautious About ROK?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4%
- Waning returns on capital imply its previous profit engines are losing steam
Rockwell Automation’s stock price of $463.67 implies a valuation ratio of 33.5x forward P/E. Dive into our free research report to see why there are better opportunities than ROK.
State Street (STT)
Market Cap: $45.63 billion
Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE: STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.
Why Are We Wary of STT?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.6% for the last five years
State Street is trading at $169.97 per share, or 13.3x forward P/E. Check out our free in-depth research report to learn more about why STT doesn’t pass our bar.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
