While the Nasdaq 100 (^NDX) is filled with cutting-edge technology and consumer companies, not all are on solid footing. Some are dealing with declining demand, high costs, or regulatory pressures that could limit future upside.

Even among high-growth companies, some are struggling, which is why we built StockStory - to help you separate winners from losers. Keeping that in mind, here are three Nasdaq 100 stocks to avoid and some better opportunities instead.

PepsiCo (PEP)

Market Cap: $213.2 billion

With a history that goes back more than a century, PepsiCo (NASDAQ: PEP) is a household name in food and beverages today and best known for its flagship soda.

Why Does PEP Worry Us?

1. Declining unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.3%
3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 1.2 percentage points

At $155.92 per share, PepsiCo trades at 17.6x forward P/E. Read our free research report to see why you should think twice about including PEP in your portfolio.

Honeywell (HON)

Market Cap: $137.4 billion

Originally founded in 1906 as a thermostat company, Honeywell (NASDAQ: HON) is a multinational conglomerate known for its aerospace systems, building technologies, performance materials, and safety and productivity solutions.

Why Should You Sell HON?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Efficiency has decreased over the last five years as its operating margin fell by 4 percentage points
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Honeywell is trading at $216.49 per share, or 19.5x forward P/E. Check out our free in-depth research report to learn more about why HON doesn’t pass our bar.

Strategy (MSTR)

Market Cap: $65.16 billion

Once a traditional business intelligence software provider, Strategy (NASDAQ: MSTR) develops AI-powered enterprise analytics software while also functioning as a major corporate holder of Bitcoin cryptocurrency.

Why Do We Avoid MSTR?

1. MicroStrategy’s core analytics software has been eclipsed by its all-in Bitcoin strategy, leaving product innovation and enterprise deals starved for attention
2. The company’s debt-financed Bitcoin buying ties shareholder fortunes to crypto swings and interest rates, amplifying downside risk and uncertainty
3. On the bright side, its vast Bitcoin treasury gives Executive Chairman Michael Saylor a unique springboard to capture crypto upside and court investors seeking leveraged exposure to digital assets

Strategy’s stock price of $186.15 implies a valuation ratio of 120.1x forward price-to-sales. To fully understand why you should be careful with MSTR, check out our full research report (it’s free).

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