I’m sure you all have heard the old Wall Street saw, “You don’t make a profit until you sell.”
Well, these stocks are sell-worthy right now, whether you have a profit in them or not. And if you are thinking about buying these stocks, look for other options. There are plenty of great stocks that have plenty of great growth ahead of them.
But these companies, at this point, are not them. Simply put, these are seven awful stocks you need to ditch right away. End of story.
They have either had their glory and can’t keep the momentum going, have become overwhelmed with disruptive market forces or simply made some decisions that did not work out well at all.
Regardless of the reason, these are all straight F-rated stocks and they should not be anywhere near your portfolio.
Awful Stocks to Sell: GoPro (GPRO)
GoPro Inc (NASDAQ:GPRO) is the HD action camera company that took the industry by storm a few years ago. Actually it was the industry a few years ago. There was no competition.
It was one of those disruptive tech firms that took high tech and made it into something elegantly simple. And then it caught the wave of action and extreme sports among younger people. This was the perfect way to record your latest mountain biking exploits to share with friends or post on YouTube.
In its heyday, GPRO stock was trading at $86 in 2014. It now trades around $10. The stock hasn’t made it to $18 in the past 12 months. That’s not an encouraging sign that its next hit is around the corner.
Quite the contrary, actually. Last year, GPRO launched a drone with a new camera attached. Unfortunately, manufacturing problems delayed the release of the drone and made the camera cut off when it was in flight, then GoPro recalled the drones when some of them started losing power. None of that helped sales in the slightest.
Awful Stocks to Sell: Jamba (JMBA)
Jamba, Inc. (NASDAQ:JMBA) is the smoothie king. But that king is now in exile.
In November, JMBA reported its Q3 numbers. Revenue was off by 38%. It missed it earnings number by 2 cents. And none of this was a shock.
Jamba was an innovator that owned and operated more than 200 stores and had over 700 franchise stores. In 2015, it sold off 179 of its stores to franchisees. Today the company owns 69 stores and has more than 800 franchised stores.
This swap was a nice infusion of cash, but it didn’t help the underlying problem — people weren’t going out for smoothies as much as they used to. Or, they were getting them from other stores that offered more selections, like Starbucks Corporation (NASDAQ:SBUX).
The smoothie trend had peaked and JMBA sold out its stores to franchisees to insulate itself from the oncoming storm. The fact that the company saw this coming and this was their solution to the challenge does not inspire confidence that things will improve.
Awful Stocks to Sell: Valeant Pharmaceuticals (VRX)
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is off 86% in the past 12 months. If that doesn’t convince you to avoid this stock, then maybe this laundry list of challenges will.
First, it’s under investigation by the U.S. government regarding its shady relationship with drug distributor Philidor Rx Services. It was a subsidiary that wasn’t listed by VRX. It’s a lurid tale of kickbacks, and as more comes out, it will certainly not help Valeant.
Second, VRX stock has a pile of debt that it has been trying to deal with while the stock tanked. The debtors are not going away and VRX may have to sell more than its non-core assets to keep them happy. If that happens, revenue will take yet another hit. It’s a terrible position to be in.
Third, its big prescription drugs are off patent or soon to be off patent. With no money for R&D, much less drug trials, this is another flashing red light regarding future revenue.
Awful Stocks to Sell: Impax Laboratories (IPXL)
Impax Laboratories Inc (NASDAQ:IPXL) is off nearly 70% in the past 12 months. But the scary thing is, there is still more downside risk here.
IPXL has been around a while and is a leading generic drugs manufacturer. That was great as Obamacare was becoming law. The Affordable Care Act as well as healthcare insurers were encouraging plans that opted for cheap generics over costly name brand drugs. This drove the industry for a couple years.
IPXL made some acquisitions during this time that worked out very well for it. But then it went back to the well once too often. It bought 15 generic products from Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) for more than half a billion dollars. The problem was, the new drugs only added about $150 million in revenue and there were growing numbers of generics on the market from a growth list of competitors.
IPXL had overplayed its hand and now was strapped with a lot of debt and few products that were going to solve the problem. Its manufacturing plant was then shut down by the FDA, which made a bad situation even worse.
Awful Stocks to Sell: Hertz Global Holdings (HTZ)
Hertz Global Holdings, Inc (NYSE:HTZ) lost almost 50% in one day, all because it reported earnings.
The stock has remained down since Nov. 8, even as the mighty Carl Icahn announced that he was still a believer.
There are two things that brought on this collapse. First, HTZ stock had to revamp its depreciation of its cars, which are the company’s core assets. That caused the lousy numbers that no one saw coming and the subsequent selloff.
But the second problem is, new ride sharing services like Uber, Lyft, ZipCar (which is a subsidiary competitor Avis Budget Group Inc. (NYSE:CAR)) and others are disrupting this entire industry. And HTZ is not adapting well to the new terrain.
Lower demand for its cars, as well as the corresponding rise in costs for servicing the fleet and its staff, are problems that will continue. If HTZ can’t come up with a good solution soon, it may well go the way of the Dodo bird.
Awful Stocks to Sell: Verint (VRNT)
Verint Systems Inc. (NASDAQ:VRNT) is a new style company, built on three divisions that are focused on delivering solutions to enterprise businesses. Its three divisions are: Actionable Intelligence, Customer Engagement Optimization and Cyber Intelligence.
Basically, VRNT is looking to be a one-stop shop for companies that need help managing and exploiting their data; extending branding and engagement across various platforms and media; and building a robust security architecture.
That all sounds pretty good. And the company has been doing well, if not great.
But the challenge is, it’s offering three services that many other companies are offering too. And given that many companies are interested in just one of these offerings, they will search out leading providers of that specific service.
And VRNT’s Q3 earnings, which were released in December, prove this out. Verint missed earnings by a dime, and revenue was off 8.5% for the quarter compared to the previous year. And its projections for next fiscal year? Single-digit growth across all its divisions.
Awful Stocks to Sell: ACI Worldwide (ACIW)
ACI Worldwide Inc (NASDAQ:ACIW) is a payment processor with a $2.2 billion market cap. That makes it one of the smaller players in this game where Visa Inc (NYSE:V), Mastercard Inc (NYSE:MA) and Vantiv Inc (NYSE:VNTV) are major players.
This is one of those industries that is transitioning very quickly as online and mobile payments increase and merchants are focused on expanding their businesses beyond their borders.
The trouble is, the space is now overcrowded, and the smaller players that have built solid niches for themselves up to now have nowhere else to grow. That leaves them with starting an M&A strategy or becoming part of someone else’s M&A strategy.
But ACIW won’t be going at much of a premium given its Q3 earnings report. Earnings were 4 cents, and that was a 17 cent miss. Revenue was also down 9% for the quarter. Any interested buyer will see if this trend continues and buy at the bottom, rather than step in and pay a premium.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
