The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning. Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
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.
Microchip Technology (MCHP)
Market Cap: $42.19 billion
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Do We Pass on MCHP?
- Sales tumbled by 11.8% annually over the last two years, showing market trends are working against it during this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- 15 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Microchip Technology is trading at $78.21 per share, or 20.1x forward P/E. Check out our free in-depth research report to learn more about why MCHP doesn’t pass our bar.
United Parcel Service (UPS)
Market Cap: $89.79 billion
Trademarking its recognizable UPS Brown color, UPS (NYSE: UPS) offers package delivery, supply chain management, and freight forwarding services.
Why Are We Bearish on UPS?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 8.4% annually
- Eroding returns on capital suggest its historical profit centers are aging
United Parcel Service’s stock price of $105.57 implies a valuation ratio of 13.4x forward P/E. To fully understand why you should be careful with UPS, check out our full research report (it’s free).
CooperCompanies (COO)
Market Cap: $14.94 billion
With a history dating back to 1958 and a portfolio spanning two distinct healthcare segments, Cooper Companies (NASDAQ: COO) develops and manufactures medical devices focused on vision care through contact lenses and women's health including fertility products and services.
Why Are We Hesitant About COO?
- Sales trends were unexciting over the last two years as its 6.5% annual growth was below the typical healthcare company
- Estimated sales growth of 4.2% for the next 12 months implies demand will slow from its two-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $75.96 per share, CooperCompanies trades at 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than COO.
Stocks We Like More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
