Investors should pay attention to stocks to sell just as much as those to buy because preserving your capital is one of the most essential rules profitable investors follow. While certain companies are trading at a discount, that’s because they are, essentially, doomed, meaning your investments would drop substantially.
Investors should focus on putting their money into companies with solid fundamentals and a track record of profitability instead of chasing risky investments that could be huge winners but could just as quickly continue to fall, and you just bought into a sinking ship.
Investors should steer clear of the three companies I discuss for several reasons, including that shares have plummeted in value over the past year, increasing financial instability and rising interest rates that affect their customer base.
Lucid Group (LCID)
Lucid Motors (NASDAQ:LCID), based in Newark, California, is an automotive manufacturer that develops and builds electric vehicles such as the Lucid Air, a luxury electric sedan, and the Lucid Gravity, a luxury electric SUV that is slated to be released sometime next year.
In August, Lucid announced its second-quarter earnings, which stated a massive net loss increase that more than tripled to approximately $764 million. And its overall revenue saw growth of 55% compared to the second quarter of 2022. Even with Lucid being able to raise $3 billion in new capital for the quarter, it still isn’t exciting investors due to their significant issue with profitably. Lucid Group also mentioned its second-quarter deliveries of 1,404 vehicles. With hopes of increasing its vehicle production numbers for the future, Lucid Group has unveiled a new production facility located in Jeddah, Saudi Arabia, making it the first car production plant within the country.
Lucid Group’s share price has fallen drastically over the past year by over 64%. The stock is inching closer to the territory of penny stock status, and Lucid is a heavily shorted stock sitting at 23% short interest. Investors should remember that Lucid Group is a violated stock and may offer a possible short squeeze. But, for now, the company is just losing traction, and investors should be cautious of this option in stocks to sell.
SunPower (NASDAQ:SPWR) is a solar tech company offering homeowners and home builders solar energy capabilities such as installation and maintenance.
Recently, Raymond James Financial, an investment bank, delivered a ratings downgrade to SunPower from Strong Buy to Outperform. Over the past year, its share price has steadily declined, equating to a loss of 78%. Its second-quarter earnings stated a total revenue increase of 11%, and its net loss was almost cut in half.
SunPower is a company vulnerable to high-interest rates because financing solar installation can become very expensive for its customers. It is seen as something other than a must-buy compared to other essential purchases. A high-interest rate environment should qualify this stock as one of the stocks to sell for most investors. .
Foot Locker (FL)
Foot Locker (NYSE:FL) is an apparel and footwear retail chain in the U.S. and internationally. This company operates under multiple brands, including Kids Foot Locker, Champs and WSS.
Foot Locker has been struggling over the past year and has seen a 40% reduction in their share price. And it has experienced large investor sell-offs from its last two earnings reports. The latest earnings report for the second quarter stated a 10% drop in total sales compared to the previous year. It also reported a net loss of $5 million when, back in Q2 2022, it had a net income of $94 million. All of their brands experienced a reduction in overall sales for the second, apart from their WSS brands segment.
Due to the recent financial issues plugging the company, they also paused their dividend payment to investors following their approved payout of $.40 per share for the second quarter. With this move, Foot Locker is trying to better position itself financially for the future. Foot Locker also reduced their total sales guidance for the remainder of the year.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.