April might be the cruelest month, but it promises to be especially nasty for certain stocks if history and technicals are any guide — and that makes them stocks to sell.
The market sure isn’t doing much this year, and that makes a good argument for taking a more active approach when it comes to your portfolio. Last year was simple. The S&P 500 added 30% for 2013. A set-it-and-forget-it approach to investing delivered excellent returns.
This year, however, the S&P 500 is up just 1.3% through the end of the first quarter. No, no one is expecting a repeat of last year’s run, but at this rate stocks will come in below the consensus forecast for a 6% gain.
That’s not much of a year. To have any chance of beating that slim market return, it’s imperative that you sell your losers before they drag down everything else.
There are a number of stocks that look like losers for April, but some look much weaker than others based on historical performance and current technicals. These names need to be jettisoned now.
Here are the top 5 stocks to sell in April:
Click to Enlarge Wall Street is concerned that Netflix’s (NFLX) red-hot profit growth is set to cool down, and that’s not helping NFLX stock. The streaming video stock got off to a strong start in 2014, topping $450 a share less than a month ago, but ever since then it’s been heading down.
NFLX stock starts the second quarter off 3% for the year-to-date and there’s ample space for it to slide further. NFLX stock is 23% below its 52-week high and 15.3% below its 50-day moving average, according to data from Thomson Reuters. It trades at a slight premium to its 200-day moving average.
But the price momentum is just not there and that suggests more weakness to come. Besides, on average NFLX stock has a monthly return for April of -1%, according to Thomson Reuters. Relative strength scores a 29 out of 100 on Thomson Reuters’ Relative Strength Indicator. That lands NFLX among the stocks to sell this month.
Family Dollar (FDO)
Click to Enlarge A bleak labor market has been good for driving traffic to the dollar stores, but it appears their stocks topped out a year ago or more.
Among the dollar store retailers, Family Dollar (FDO) stands out as one to sell in April. FDO stock is off 10% for the year-to-date and it’s hard to see a reversal coming in the very near future. True, FDO stock has an average monthly return of 1.4% for April, but that’s lags the industry average. More worrisome is that it tends to crap out in May and June, with average monthly losses of 0.3% and 3.3%, respectively.
As for price momentum to the upside, there is none. FDO stock trades 23% below its 52-week high, 7.3% below its 50-day moving average, and 13.6% below its 200-day moving average. FDO stock has little relative strength heading into the month, scoring a 30 out of 100 on Thomson Reuters’ Relative Strength Indicator. FDO sure looks like one of the stocks to sell this month.
Sirius XM (SIRI)
On average SIRI stock adds 2% in April, but then sputters out again in May and June, according to Thomson Reuters. And even that average 2% gain comes at a price because it lags the industry by 4 percentage points. Given the technicals, it looks like SIRI stock won’t even hit that average 2% gain this month.
SIRI stock is 23% below its 52-week high and 8.4% below its 50-day moving average. The 200-day moving average is even more bearish, with SIRI stock trading 13% below that level. SIRI stock also enters the month with little relative strength, scoring a 28 out of 100 on Thomson Reuters’ Relative Strength Indicator. As such, SIRI joins the list of stocks to sell in April.
SYMC stock is off 15% for the year-to-date with more weakness to come. SYMC stock enters the month trading 26% below its 52-week high and 5% below its 50-day moving average. SYMC stock is also 14.3% below its 200-day moving average. Furthermore, SYMC stock is entering a seasonally weak period of performance. SYMC stock loses an average of 0.5% in April, 0.1% in May and 2.2% in June. Relative strength is likewise weak, scoring 44 out of 100 on Thomson Reuters’ Relative Strength Indicator.
Over the last three month, SYMC stock has had 31 up days and 31 down days. The best day produced a gain of 4.9%, vs. a worst day that saw SYMC stock lose 13%. That makes SYMC earn a place with the stocks to sell this month.
Barrick Gold (ABX)
Through good years and bad, ABX stock has lost an average of 6.4% in April over the last decade. It bounces back in May with a 4% gain, but then slides another 1.5% in June. ABX stock also lacks relative strength heading into the month, scoring a 40 out of 100 on Thomson Reuters’ Relative Strength Indicator.
ABX stock is up 2% for the year-to-date, but the technicals say that the immediate trend is down. ABX stock is 38% below its 52-week high and 9.2% below its 50-day moving average. It also trades 1.6% below its 200-day moving average. From a technical standpoint, there’s no reason to expect ABX stock to shine in April — or through the rest of the spring — and that lands it among the stocks to sell.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.