For some investors, selling stocks can be hard. It can seem like a personal failure. But it’s really just a mindset. You have to understand that waiting out a stock may be the right thing to do when time is on your side. But if you are investing for specific and/or time-sensitive goals, holding onto an underperforming stock can have a big impact.
Ideally, an investor could look at their portfolio at the end of the year and like trimming a rose bush, cut off the dead parts and move on. But with a new year upon us, it could be tempting to wait things out.
We’ve provided you this presentation to give you a look at ten stocks that you should consider selling. Some of these stocks are being affected by short-term setbacks. Others may be a buying opportunity at a lower price. That’s for you to decide.
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- Chesapeake Energy
- Beyond Meat
- Blue Apron
- NIO
- Pier 1 Imports
- Naked Brands
- Shopify
- Canopy Growth
- Nokia
- American Airlines
#1 - Chesapeake Energy (OTCMKTS:CHKAQ)
Chesapeake Energy (CHK) - Leading off our list is Chesapeake Energy (NYSE:CHK). This is a stock that would not be getting any attention except from traders. Some traders believe that the stock is so exceptionally low that there are gains to be made. The problem is that the company has a massive debt problem. They were one of the first through the door on the controversial exploration process known as fracking. This form of exploration saw the company pile up debt shortly before the Obama administration came in. That put fracking in regulatory crosshairs that were crippling to Chesapeake. Fracking has made a bit of a comeback with a more favorable administration, but it’s too little too late for Chesapeake. The company has three options. Wait for oil and gas prices to rise for a sustained period (that took a hit with the onset of the Coronavirus), file for bankruptcy, or sell assets to pay down debt. The latter appears to be most likely, but as an investor, you have to ask if this is just postponing the inevitable.
About Chesapeake Energy
Chesapeake Energy Corp. is an independent exploration and production company, which engages in acquisition, exploration and development of properties for the production of oil, natural gas and natural gas liquids from underground reservoirs. It focuses on projects located in Louisiana, Ohio, Oklahoma, Pennsylvania, Texas, and Wyoming.
Read More - Current Price
- $3.05
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#2 - Beyond Meat (NASDAQ:BYND)
Beyond Meat (BYND) - Beyond Meat (NASDAQ:BYND) has been on a rollercoaster ride since it launched its initial public offering (IPO) in 2019. The main concern I have with BYND stock is that it is the only pure-play for investors to invest in the plant-based food movement. However, there are two sides to that coin. On the one hand, plant-based protein does not appear to be going away. On the other hand, Beyond Meat never really had a moat in the sector. And any moat it did enjoy is quickly eroding. So when you look at the company, you see a sector that is filling up with competitors, a product that was just taken off the Tim Hortons (NYSE:THI) menu after a so-so trial (the company would not have taken it off the menu if the trial had gone gangbusters), and a stock that many feels is overvalued. Beyond Meat was one of the first through the door on a movement that may be one of the defining trends of this decade. But that’s not a reason to reward the stock at its current levels.
About Beyond Meat
Beyond Meat, Inc, a plant-based meat company, develops, manufactures, markets, and sells plant-based meat products in the United States and internationally. The company sells a range of plant-based meat products across the platforms of beef, pork, and poultry. It sells its products through grocery, mass merchandiser, club stores, and natural retailer channels, as well as various food-away-from-home channels, including restaurants, foodservice outlets, and schools.
Read More - Current Price
- $3.55
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 3 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $5.50 (54.9% Upside)
#3 - Blue Apron (NYSE:APRN)
Blue Apron (APRN) - Continuing with the food theme is Blue Apron (NYSE:APRN). This was another company that was one of the first within its sector to go public with a stock offering. But Blue Apron’s stock has fallen almost 97% in three years. I see three reasons for the stock’s predicament. First, it is apparent that a lot of Americans just don’t like to cook. So what’s the advantage of having the ingredients delivered to you, if you’re trying to reach a base that has meal delivery at their fingertips? The second problem is that APRN and others like it woke a sleeping giant. It wasn’t long before many grocery chains came to the realization that for some customers, the appeal to Blue Apron was not having to shop for the ingredients. But now they can shop on their phone and have their groceries ready at curbside or delivered to their home. Third, it’s a competitive space that doesn’t have room for many competitors. There are just too many obstacles in the meal-kit industry for Blue Apron to generate the growth and profits that it requires to be a viable investment.
About Blue Apron
Blue Apron Holdings, Inc operates a direct-to-consumer platform that delivers original recipes with fresh and seasonal ingredients. The company also operates Blue Apron Market, an e-commerce market that provides cooking tools, utensils, pantry items, and other products. In addition, it offers Blue Apron Wine, a direct-to-consumer wine delivery service that sells wines, which can be paired with its meals.
Read More - Current Price
- $12.99
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#4 - NIO (NYSE:NIO)
Nio (NIO) - Next I’m moving over to electric cars, and I’m not going to write about Tesla (NYSE:TSLA)? That’s a separate article, but in the electric vehicle space, Nio (NYSE:NIO) looks to be coming down from a dead cat bounce. And that may have the company going out of business. Nio staged a rally that more than doubled its stock price. The company sold more electric vehicles than expected in the fourth quarter. Plus, the Chinese government announced they would not be making significant cuts to the subsidies it provides. That’s all well and good. The problem for Nio is that the company is running out of cash. Company executives acknowledged both a $275 million cash balance and the fact that balance is not sufficient to provide working capital for 2020. Plus, the company was expecting a $1 billion cash infusion from the Chinese government in Guangzhou. But that investment looks like it will be sizably less (more like $150 million) if it happens at all. It’s tough to bet on a stock that has a likelihood of not being in business in a year’s time.
About NIO
NIO Inc designs, manufactures, and sells electric vehicles in the People's Republic of China. The company is also involved in the manufacture of e-powertrain, battery packs, and components; and racing management, technology development, and sales and after-sales management activities. In addition, it offers power solutions for battery charging needs; and other value-added services.
Read More - Current Price
- $4.54
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $5.71 (25.8% Upside)
#5 - Pier 1 Imports (OTCMKTS:PIRRQ)
Pier 1 Imports (PIR) - The retail recovery is not a reality for all companies. One example is Pier One (NYSE:PIR). It’s never good when a company issues a “going concern” warning. But that’s exactly what Pier One did when it released its third-quarter results. The omnichannel model is breathing new life into some retail outlets. But those companies that were slow to adapt are being left behind. The company ended the third quarter with just $11 million in cash and $336 million in debt. And any credit that the company has available to it will quickly be used up if the company continues on its current cash-burn rate. But Pier One has a plan. The company is shuttering nearly half of its current stores. It is also closing distribution centers and cutting corporate expenses. All of this may keep the company out of bankruptcy for a year or more. But what you should be looking for is a plan for growth, not just survival. Until it can do that, it’s a stock to stay away from.
About Pier 1 Imports
Pier 1 Imports, Inc engages in the retail sale of decorative accessories, furniture, candles, housewares, gifts, and seasonal products. It offers decorative accents and textiles, such as rugs, wall decorations and mirrors, pillows, bedding, lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, candles, fragrances, gifts, and seasonal items; and furniture and furniture cushions that are used in living, dining, office, kitchen and bedroom areas, sunrooms, and patios.
Read More - Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Naked Brands (NASDAQ:NAKD)
Naked Brands (NAKD) - Another retailer that is under the gun is Naked Brands (NASDAQ:NAKD). The Australian-based company is best known for its Frederick’s of Hollywood brand and supermodel Heidi Klum. However, the stock has dropped over 98% in just over 12 months. No matter how you do the math, it’s difficult to be excited about a stock that is not growing in an industry that is showing growth. Intimate apparel may not be the growth sector it used to be, but Allied Market Research says that the global market is expected to grow at a compound annual growth rate (CAGR) of 8.1% through 2024. And Statista projects the U.S. lingerie market to have an $11.36 billion value by 2025. That would be a 65% increase from its $6.87 billion value in 2018. All of which is to say, there’s money to be made, but Naked Brands does not appear to have a formula that is winning customers.
About Naked Brand Group
Cenntro Electric Group Ltd. is an EV technology company that designs and manufactures electric light and medium duty commercial vehicles. The company's ECVs are designed to serve a variety of corporate and governmental organizations in support of city services, last-mile delivery and other commercial applications.
Read More - Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - Shopify (NYSE:SHOP)
Shopify (SHOP) - Shopify (NYSE:SHOP) is not in any near-term trouble. In fact, I’m sure there are some investors that think I’m nuts for lumping the e-commerce company in with this lot. But hear me out. It’s not the company. It’s the company it keeps. In the last five years, SHOP stock has presented shareholders with a 1,550% return. Yet, the company is not yet profitable. The company has trailing 12 months earnings per share (EPS) of -1.15. The bullish crowd will point to other companies who grew into their stock price, and then some. Amazon (NASDAQ:AMZN) is perhaps the best example and it’s a company that Shopify has to thank for its meteoric growth. But this has to be a case of caveat emptor. I won’t disagree with the momentum crowd that stocks will go up until they don’t. However, I also believe that Newton’s law of gravity applies to more than just apples falling from trees. Right now, SHOP investors may not have reason to pay attention. But bubbles tend to burst rapidly, so consider this a word of caution. 1,550% is a nice profit to take.
About Shopify
Shopify Inc, a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing.
Read More - Current Price
- $108.95
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $99.03 (9.1% Downside)
#8 - Canopy Growth (NASDAQ:CGC)
Canopy Growth (CGC) - Of all the cannabis stocks that I could pick, you might wonder why I’m choosing to look at Canopy Growth (NYSE:CGC). After all, compared to many other struggling cannabis stocks, CGC has a veritable war chest built up due to its partnership with Constellation Brands (NYSE:STZ). But the reason that Constellation invested in Canopy was the potential to develop and market cannabis-infused beverages that would coincide with the launch of Cannabis 2.0. For the uninitiated, Cannabis 2.0 is when the recreational marijuana market in Canada opened up for derivative products (edibles, vapes, etc.). Infused beverages were expected to be a part of this. They still may be, however, Canopy is having problems getting the beverages to commercial scale. And any delay is a setback for a stock and a sector that does not have much wiggle room with investors. Furthermore, without the catalyst from infused beverages, there really isn’t a lot for investors to get excited about with CGC stock. And that could make them question its valuation. Canopy is likely to be standing when the sector shakes out, but that doesn’t mean you should buy the stock right now.
About Canopy Growth
Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in the United States, Canada, Germany, and internationally. It operates through Canada Cannabis, International Markets Cannabis, and Storz & Bickel segments.
Read More - Current Price
- $2.83
- Consensus Rating
- Sell
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $3.50 (23.7% Upside)
#9 - Nokia (NYSE:NOK)
Nokia (NOK) - For all the talk of 5G, you would think it was a tide that was lifting all stocks. That may eventually be the case, but it hasn’t worked out that way so far for Nokia (NYSE:NOK). Unlike some of the other stocks in this presentation, this is not a question of Nokia going out of business. In fact, there are reasons to believe that Nokia may have a bright future. The problem for NOK investors is that the company has a lot of exposure to China and they are entering an aggressive investment cycle that will put pressure on the company’s margins. All of which brings the discussion back to 5G. In all likelihood, Nokia will come out of this period as a stock that is worth taking a long position on. But that time is not likely to come in 2020 and maybe not 2021 either. You can find other profitable areas to invest in then keeping your money on hold with NOK stock.
About Nokia Oyj
Nokia Oyj provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments: Network Infrastructure, Mobile Networks, Cloud and Network Services, and Nokia Technologies. The company provides fixed networking solutions, such as fiber and copper-based access infrastructure, in-home Wi-Fi solutions, and cloud and virtualization services; IP networking solutions, including IP access, aggregation, and edge and core routing for residential, mobile, enterprise and cloud applications; optical networks solutions that provides optical transport networks for metro, regional, and long-haul applications, and subsea applications; and submarine networks for undersea cable transmission.
Read More - Current Price
- $4.43
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $6.43 (45.0% Upside)
#10 - American Airlines (NASDAQ:AAL)
American Airlines (AAL) - For a company that did not need bad news, American Airlines (NASDAQ:AAL) has certainly had its share of it. Despite the obstacles facing the stock with the 737 Max grounding, the stock looks inexpensive compared to some of its competitors, notably Delta Airlines (NYSE:DAL) and Southwest Airlines (NYSE:LUV). However, the company announced on January 30 that it along with Delta would be temporarily suspending all flights to China due to concerns over the coronavirus. While American and Delta will almost assuredly not be the only airlines to cancel flights, the company did not need another setback to draw attention to its large debt. AAL stock has declined nearly 50% from its $50 price level in 2018. And the larger problem is there’s not a lot of reason to believe it will go up anytime soon. It may seem like piling on at this moment, but airlines have always been susceptible to “black swan” events. Right now, investors have little motivation to buy the stock.
About American Airlines Group
American Airlines Group Inc, through its subsidiaries, operates as a network air carrier. The company provides scheduled air transportation services for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, DC, as well as through partner gateways in London, Doha, Madrid, Seattle/Tacoma, Sydney, and Tokyo.
Read More - Current Price
- $16.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $15.99 (5.2% Downside)
Assessing when to sell a stock can be like getting notice of a storm. When an analyst downgrades a stock it’s like a storm watch. Conditions are favorable for the stock to decline, but it may be too early to tell. This may be a time to more carefully monitor those stocks.
However, the world can be a complicated place. And fortunes for a stock can change overnight. These are like storm warnings. Forget anything the analysts are saying and take action now. Boeing (NYSE:BA) is a great example of an iconic American company that is seeing its stock under pressure due to “black swan” events that, by definition, analysts could not have initially perceived.
On the other end of the spectrum, there are times when a stock just gets overbought. When this happens, investors need to have the mindset that it’s okay to take a profit and live to fight another day. The tech bubble of the early 2000s and the housing bubble of 2007 taught investors that when things start looking too good to be true they usually are.
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