If you’ve got a losing stock in your portfolio, why would you wait to sell it? In fact, selling back stocks as quickly as possible is important to protect your portfolio. Identifying the right stocks to sell is as important as finding the best stocks to buy.
Weak stocks have a lasting impact if you don’t make a move. They can drag down the value of your portfolio because their underperformance counters the gains of other investments. It’s hard to make money when stocks to sell linger in your pocket.
And by stubbornly holding onto those names, you miss other opportunities in the market. You can’t buy A-rated stocks when your money is tied up in F-rated names.
It’s best to use tools like the Portfolio Grader to help you identify stocks to sell and move them out before they can cause too much damage. The Portfolio Grader ranks every stock in the market, and the names on this list come up lacking when you consider factors like earnings performance, growth, momentum and analyst sentiment.
The stock market is always changing, so it’s good to check your portfolio regularly. But when you see the same names underperforming regularly, it’s time to protect yourself and sell as soon as possible.
Digital Turbine (APPS)
Digital Turbine (NASDAQ:APPS) is a software company that operates an end-to-end platform that includes mobile applications and advertising. It works with smartphone original equipment manufacturers to provide apps, and it can develop targeted advertising campaigns.
But the company is losing money fast. Its market cap has gone from $1.5 billion at the end of 2022 to just over $500 million. Revenues are down, losses are mounting, nothing’s going right, which makes this one of the stocks to sell while you can.
Digital turbine reported earnings for the fiscal second quarter of 2024 (ending Sept. 30, 2023), that included revenue of $143.3 million, down 18% from a year ago. The company posted a loss of $161.5 million, or $1.61 per share, versus a profit of $11.7 million and 11 cents per share just a year ago.
The Texas company is going head-to-head against blue-chip competitors who have massive advantages in both market share and resources. I’m not counting on Digital Turbine to turn things around.
APPS stock is down 70% in the last year and gets an “F” rating in the Portfolio Grader.
Boxlight (BOXL)
Boxlight (NASDAQ:BOXL) is a Georgia tech company that creates products for the classroom and office. Its products include interactive displays, touchscreens, whiteboards and applications that can be used in classrooms.
Those are interesting ideas. But there’s a lot of danger here as well. Boxlight’s stock is deep in penny stock territory at less than $1 per share. It has a market capitalization of only $7 million. And it’s continuing to post losses.
Results from the third quarter included revenue of $49.7 million, down a substantial 28% from a year ago. The company posted a net loss of $17.8 million, compared to a profit of $3.1 million a year ago.
Investors can hope that a change in leadership will help. Boxlight announced that CEO Michael Pope stepped down in January, and was succeeded by R. Wayne Jackson on an interim basis.
But they would be better off just bailing out of this stock. BOXL is down 75% in the last year and gets an “F” rating in the Portfolio Grader.
Estee Lauder Companies (EL)
Estee Lauder Companies (NASDAQ:EL) is a cosmetics company with a long history going all the way back to 1946.
Today the company has two dozen brands, including its namesake Estee Lauder line. It sells skin care products, makeup, perfumes and hair care products.
But sales in 2023 were off significantly and this year isn’t off to a great start. Estee Lauder estimates guidance in the third quarter of 35 cents to 46 cents per share, much lower than analysts’ consensus outlook of 83 cents per share.
For the full fiscal year, Estee Lauder believes it will have EPS of $2.08 to $2.23 per share, while analysts expect $2.33 per share.
Not surprisingly, Estee Lauder is cutting expenses – laying off 3,000 people, or as much as 5% of its staff. That may stop the bleeding, but you’ll need a lot more makeup than Estee Lauder has to make this pig look pretty.
EL stock is down 50% in the last year, making it one of the stocks to sell before things get worse and gets an “F” rating in the Portfolio Grader.
Lumen Technologies (LUMN)
Lumen Technologies (NASDAQ:LUMN) is a troubled stock that isn’t getting any better. Lumen is a telecommunications company that provides network services, cloud solutions, voice and managed services.
In November, the company announced it was laying off 4% of the workforce as part of a restructuring intended to trigger some growth. It needs it, considering that Lumen is saddled with more than $20 billion in debt. That’s a huge amount for a company with a market cap of $1 billion and only $311 million in cash.
Earnings for the fourth quarter included revenue of $3.5 billion, down from $4.8 billion a year ago. The company lost nearly $2 billion for the quarter, although that was better than its $3 billion loss in the same period a year ago.
LUMN stock is down 75% in the last year and gets an “F” rating in the Portfolio Grader.
Moderna (MRNA)
I wouldn’t be surprised if you had Moderna (NASDAQ:MRNA) in your portfolio. The company was a high-flyer during the Covid-19 pandemic as it became one of the first to fast-track a coronavirus vaccine in the U.S.
It made sense then to invest in Moderna. But it doesn’t now.
Covid-19 isn’t as lethal as in 2020, but it’s still a problem. But because the U.S. government isn’t in pandemic mode any longer and isn’t paying for billions of vaccines to distribute, the demand has fallen through the floor. Only an estimated 14% of U.S. adults have an updated Covid-19 vaccine.
That makes it hard for Moderna to maintain its revenue numbers. A year ago, Moderna posted revenue in the third quarter of $3.12 billion. This year, that number was down to $1.75 billion.
That means Moderna posted a net loss for the quarter of $3.63 billion, or $9.53 per share. That’s a tough beat for any investor.
If you’re still holding MRNA stock, it’s time to let it go. Moderna is down 43% in the last year and gets an “F” rating in the Portfolio Grader.
Penn Entertainment (PENN)
Penn Entertainment (NASDAQ:PENN) had a forgettable 2023 and shareholders are hoping for better things in 2024. But I don’t think you should wait around, as long as Penn remains as troubled as it is.
Penn makes its money from legalized gambling, and one would have thought that’s a cash cow. But there appears to be a ceiling, even with something as lucrative as gambling.
Thirty-eight states have approved gaming, but further expansion will be slow. And the biggest states in the country – Texas and California – are both stubbornly against gambling.
On top of that, Penn wasted $550 million by buying Barstool Sports over the last three years before getting buyer’s remorse and selling it back to its founder for just $1.
Revenue in the third quarter was down slightly from a year ago. PENN needs to show growth if it will get a better score from the Portfolio Grader. Currently, it has an “F” rating, and the stock is down 37% in the last year.
Petco Health and Wellness (WOOF)
Investors probably jumped into Petco Health and Wellness (NASDAQ:WOOF) counting on Americans’ love of their pets to carry them to riches. Roughly 44% of U.S. households have a dog and nearly 30% have a cat, according to Forbes.
Petco has over 1,500 brick-and-mortar stores in the U.S., Mexico and Puerto Rico. Besides food and products for dogs and cats, Petco sells products for birds, fish, rodents, and all sorts of animals (and yes, you can buy your pets there as well). Still, it’s one of the retail stocks to sell ASAP.
But a steep downturn in 2023 raises plenty of red flags. Petco’s margins are off as the company slashed prices to keep products moving.
That meant it had to slash its earnings estimates to a range from 24 cents to 30 cents per share, from its previous projection of 40 cents to 48 cents per share.
Revenue in the third quarter was $1.49 billion, down slightly from a year ago, and the company posted a loss of $14.5 million versus a profit of $30 million in the same period a year ago.
WOOF stock is down 79% in the last year. It gets an “F” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.