There's an expression in marketing that you buy on emotion, and you justify with facts. Unfortunately, many investors apply that same strategy to the stocks they buy and sell. That's historically a formula that leads to poor results.
The reality is that the most successful investors are typically those who can keep their emotions out of their investment decisions. That includes knowing when to sell stocks they own and may have become attached to.
But selling is a normal part of the investment process. And that's even true for buy-and-hold investors. For example, in 2023, Warren Buffett, one of the most famous buy-and-hold investors, sold part of his position in Chevron Corporation (NYSE: CVX).
Does this mean Buffett no longer likes the oil and gas giant? Not necessarily; his hedge fund still holds a large position in CVX stock. He just felt there were better opportunities for allocating capital.
In this special presentation, we give you seven growth stocks that investors should consider selling. With each stock, we'll give you the specific reasons for including that stock so that you can see if it applies to a stock you own or are considering buying.
Quick Links
- Intel
- Amgen
- Unilever
- IBM
- Automatic Data Processing
- Marriott International
- Southern Copper
#1 - Intel (NASDAQ:INTC)
Intel Corporation (NASDAQ: INTC) may be a story of misplaced optimism. The company became a household name for putting "Intel inside” personal computers. But the chip market has evolved, and Intel has been slow to make that transition.
Intel has failed to show investors a clear plan for how it will regain its supremacy in the chip market. It lags far behind competitors like Nvidia Corporation (NASDAQ: NVDA) and Advanced Micro Devices (NYSE: AMD). And it recently had to walk away from its agreement to buy Tower Semiconductor after not getting regulatory approval from China in the needed time.
In a sector where the top names have posted stock price gains of over 100%, 200% or even higher in the five years ending in August 2023, INTC stock is down 29% in that same time period. The company
There are 44 analysts that cover Intel. Unfortunately for the company, 35 of those 44 have a Hold rating or lower on the stock.
About Intel
Intel Corporation designs, develops, manufactures, markets, and sells computing and related products and services worldwide. It operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, and Intel Foundry Services segments. The company's products portfolio comprises central processing units and chipsets, system-on-chips (SoCs), and multichip packages; mobile and desktop processors; hardware products comprising graphics processing units (GPUs), domain-specific accelerators, and field programmable gate arrays (FPGAs); and memory and storage, connectivity and networking, and other semiconductor products.
Read More - Current Price
- $19.52
- Consensus Rating
- Reduce
- Ratings Breakdown
- 1 Buy Ratings, 25 Hold Ratings, 5 Sell Ratings.
- Consensus Price Target
- $30.04 (53.9% Upside)
#2 - Amgen (NASDAQ:AMGN)
Amgen Inc. (NASDAQ: AMGN) is an ideal choice for value-oriented investors. By almost every measure, Amgen offers investors an enticing dividend with a 3.21% yield, an $8.52 annual payout per share, and 11 consecutive years of dividend growth.
But the story is less clear if you're looking for stock price growth. AMGN stock is up slightly more than 1% in 2023, and the consensus price target suggests the stock may be topping out.
The company delivered a solid earnings report in August 2023, but it couldn't provide investors with clarity over its proposed $28 billion acquisition of Horizon Therapeutics. (NASDAQ: HZNP). The Federal Trade Commission (FTC) is holding up the acquisition over regulatory concerns. As of this writing, the FTC has ignored Amgen's commitments to address those concerns.
Of the 26 analysts that have rated Amgen in the last three months, 17 give the stock a Hold rating or worse. And the consensus price target of $252.96 is 4.5% lower than the stock's closing price on August 16, 2023.
About Amgen
Amgen Inc discovers, develops, manufactures, and delivers human therapeutics worldwide. The company's principal products include Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis, and oral ulcers associated with Behçet's disease; Prolia to treat postmenopausal women with osteoporosis; XGEVA for skeletal-related events prevention; Repatha, which reduces the risks of myocardial infarction, stroke, and coronary revascularization; Nplate for the treatment of patients with immune thrombocytopenia; KYPROLIS to treat patients with relapsed or refractory multiple myeloma; Aranesp to treat a lower-than-normal number of red blood cells and anemia; EVENITY for the treatment of osteoporosis in postmenopausal for men and women; Vectibix to treat patients with wild-type RAS metastatic colorectal cancer; BLINCYTO for the treatment of patients with acute lymphoblastic leukemia; TEPEZZA to treat thyroid eye disease; and KRYSTEXXA for the treatment of chronic refractory gout.
Read More - Current Price
- $263.38
- Consensus Rating
- Hold
- Ratings Breakdown
- 11 Buy Ratings, 12 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $319.67 (21.4% Upside)
#3 - Unilever (NYSE:UL)
Unilever (NYSE: UL) is down 10% in the last five years, and that includes the 7% gain in UL stock in 2023. What makes that performance concerning for investors is that Unilever is a consumer staples stock. These stocks have outperformed the market in the last five years as consumers have prioritized the essentials no matter what else was happening in the economy.
Looking towards the latter part of 2023, Unilever presents investors with a mixed bag. Earnings are expected to rise by around 7.5% in the next 12 months. That may not be fully priced into UL stock. But analysts are presenting investors with a range of options.
Fourteen out of 24 analysts issuing a rating in the last three months give UL stock a Hold rating or lower. However, of the remaining 10 analysts, nine give the stock a Strong Buy rating. If you have conviction about the stock, a dividend yield of 3.68% may be enough to keep you interested, but otherwise, you can take this opportunity to sell.
About Unilever
Unilever PLC operates as a fast-moving consumer goods company in the Asia Pacific, Africa, the Americas, and Europe. It operates through five segments: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. The Beauty & Wellbeing segment engages in the sale of hair care products, such as shampoo, conditioner, and styling; skin care products including face, hand, and body moisturizer; and prestige beauty and health & wellbeing products consist of the vitamins, minerals, and supplements.
Read More - Current Price
- $57.16
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 1 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $61.75 (8.0% Upside)
#4 - IBM (NYSE:IBM)
International Business Machines (NYSE: IBM) is another technology company that is having difficulty making a pivot. The company is dipping into some of its war chest of cash to implement a growth-through-acquisition plan. It expects to be finished with those acquisitions by the end of 2023.
In the meantime, IBM has a high-margin software business, but analysts estimate revenue growth of just 3% in 2024. However, that revenue growth doesn't count all the acquisitions that Big Blue has in place. Some analysts also believe that IBM will benefit from the need for consultants to help companies implement generative AI in a responsible manner.
That's a lot of ifs for investors to digest. Nevertheless, IBM stock may appeal to value investors as it pays a reliable dividend with a 4.72% yield. The company is also a dividend aristocrat that has increased its dividend for 30 consecutive years.
But a stable dividend isn't what growth-oriented investors in the tech sector are looking for. Those investors have watched the stock do nothing for the last five years.
This range of opinions is reflected in the opinion of the 18 analysts that have issued ratings on IBM stock over the last three months. There are 12 holds and one strong sell, but five strong buys. As with other stocks on this list, there are better options for your capital in a sideways market.
About International Business Machines
International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate.
Read More - Current Price
- $223.36
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 8 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $208.94 (6.5% Downside)
#5 - Automatic Data Processing (NASDAQ:ADP)
Sometimes the best reason to sell a stock is that it's simply too expensive. That's the case with Automatic Data Processing, Inc. (NASDAQ: ADP). The company provides cloud-based solutions for human resources.
The company has always been a favorite of value-oriented investors because its business model delivers consistent revenue and earnings that support a dividend that has increased for the last 48 years.
However, in 2020, the company's revenue and earnings grew sharply to support the shift to remote and hybrid work. ADP stock was a beneficiary as it climbed over 75% since the beginning of 2020. This made the company a great choice for growth-oriented investors.
But that growth is leveling off. And ADP stock looks expensive with a P/E ratio of over 30x earnings and a forward P/E ratio of around 27x.
Of the 22 analysts that have issued a rating for ADP in the last three months, 19 have either a Hold or lower.
About Automatic Data Processing
Automatic Data Processing, Inc provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions.
Read More - Current Price
- $294.02
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 8 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $289.91 (1.4% Downside)
#6 - Marriott International (NASDAQ:MAR)
Marriott International, Inc. (NASDAQ: MAR) continues to defy expectations that the revenge travel phenomenon is over. The company reported earnings in August and beat expectations on the top and bottom lines and raised its guidance for the rest of the year.
But the stock is starting to look out over its skis. MAR stock is up 24% in the last 12 months and over 67% in the last five years. For investors to see continued growth, consumer spending will have to continue to defy expectations.
That may happen, but if you're a growth investor playing the percentages, that seems like a tricky bet. Marriott reinstated its dividend in 2022, so that may be enough to keep income investors interested. But for growth investors, this is a good time to check out and take your profits on MAR stock.
About Marriott International
Marriott International, Inc engages in operating, franchising, and licensing hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under the JW Marriott, The Ritz-Carlton, The Luxury Collection, W Hotels, St. Regis, EDITION, Bvlgari, Marriott Hotels, Sheraton, Westin, Autograph Collection, Renaissance Hotels, Le Méridien, Delta Hotels by Marriott, Tribute Portfolio, Gaylord Hotels, Design Hotels, Marriott Executive Apartments, Apartments by Marriott Bonvoy, Courtyard by Marriott, Fairfield by Marriott, Residence Inn by Marriott, SpringHill Suites by Marriott, Four Points by Sheraton, TownePlace Suites by Marriott, Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, Element Hotels, Protea Hotels by Marriott, City Express by Marriott, and St.
Read More - Current Price
- $283.96
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $266.25 (6.2% Downside)
#7 - Southern Copper (NYSE:SCCO)
Southern Copper Corporation (NYSE: SCCO) illustrates the risk of investing in stocks heavily tied to an underlying commodity. In this case, copper. The price of copper surged in 2022, and so did SCCO stock.
But 2023 has been a different story for copper. Demand is under pressure as the global economy weakens, particularly in the manufacturing sector. Southern Copper lagged the price of copper on its way up and now looks overvalued as copper is well off its highs.
This is reflected in analyst sentiment. Of the 17 analysts that have rated SCCO stock in the last three months, 16 have given the stock a Sell rating or lower.
Having even a handful of analysts give a stock a Sell rating is unusual. To have virtually every analyst assign the stock the same rating is a bearish signal that investors would do well not to ignore. The consensus price target for SCCO stock is $63.43, 21% lower than its closing price on August 17, 2023.
About Southern Copper
Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc, copper, molybdenum, silver, gold, and lead.
Read More - Current Price
- $93.01
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 3 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $94.81 (1.9% Upside)
Many investors have countless strategies they use to help them buy stocks. A significantly smaller number have sound strategies for selling them.
We hope this presentation has shown you many reasons to sell a stock. Sometimes you buy a stock at the wrong price. Your reason for owning the stock may change. You may want to take profit. These are all valid reasons to sell stocks. But sometimes, the best reason is simply there are better options for getting a return on your investment.
And remember, selling a stock doesn't mean you have to sell your entire position. And even if you do, it doesn't mean you have to say goodbye to the stock forever. That's what watchlists are for. And if you're a MarketBeat All Access member you can manage an unlimited number of watchlists and get real-time alerts when there's news that may affect that stock.
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