3 Stocks to Dump From Your Portfolio Now

2015 has started off with one of those knee-rattling selloffs that has everyone asking a couple of questions.

3 Stocks to Dump From Your Portfolio Now

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  • First: “Is this the big one? Is the market finally going see the 10 percent or deeper decline that it has eluded for more than five years now? Should I sell some stocks?”
  • Second: “Is this the really big one? Where the global economy finally melts everything down? Should I sell everything?”

The answer lies somewhere in between.

Rarely do we see a market that is able to stretch out a bull run like the current one has. Of course, the “Bernanke/Yellen Put” has a lot to do with the length and strength of the rally, and now we’re likely to see our markets benefit from the newly minted “Draghi Put.” This doesn’t mean that fear No. 1 is off the table.

To get a little technical, correlation of S&P 500 stock has been wavering lately, signaling that the time to get away from index investing and start picking the right stocks is now. This also means it’s time to make sure that the wrong stocks aren’t in your portfolio, as they can do more damage that good, even for buy-and-holders.

Here are a couple of well-known names that haven’t made the cut for the first half of 2015.

Apple Inc. (AAPL)

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That’s right, from our view, almighty Apple Inc. (NASDAQ:AAPL) is not the company that it was 10 years ago when you could blindly buy and hold it and beat the market. Today’s Apple innovates less and is saturated with buyers, which is never a good combination.

We don’t expect the Apple Watch, Apple TV or other on-deck items to break AAPL stock into the next stratosphere. The stock’s price already reflects investor’s expectations for these products. Barring our iPhones being able to start teleporting us across town, it’s hard to see the “one last thing” that’s going to make AAPL a must-hold for 2015.

Take a look at some better dividend-yielding technology stocks in lieu of Apple.

Verizon Communications Inc. (VZ)

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Telecommunication giants Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have had a great run as we’ve all gobbled up their wireless offerings.

The question for both of these companies is “Where now?” After building their networks and saturating the market with bandwidth, where will they go next, besides trying to steal each other’s customers and revenue?

Consumers are starting to wear thin as their cell phone bills resemble car payments, meaning that price wars could begin to really heat up — not good for the sector that has the highest earnings growth expectations, according to Factset Research.

Telecoms like VZ and T won’t go away in 2015, but only because investors will look at them for their dividends and not their growth potential. Your money will be better invested elsewhere if you’re trying to beat the S&P 500 in 2015.

Schlumberger Limited (SLB)

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Some oil stocks have been cut in half since July at the hands of a historic slide in crude oil prices. The precipitous drop has some investors buying the dip, but these are the times when you have to make sure that you don’t lose a finger, or a lot of money, trying to catch the falling knife.

Yes, Schlumberger Limited (NYSE:SLB) and others are “cheap” relative to where they were trading six months ago, but is there a real argument for higher prices yet? From our perspective the answer is “no,” which means that cheap can get even cheaper — a rule that a lot of dip buyers can tend to forget.

Remember, a stock has to climb 45% to break even after a 30% decline. We just don’t see a technical or fundamental argument for SLB and other oil stocks to make that jump. One reason that SLB is at the top of our “don’t buy” list for oil companies is the extremely large percentage (89%) of analysts that currently hold “buy” recommendations on the stock. This makes the shares more likely to see downgrades and less likely to see upgrades, which decidedly shifts the risk/reward spectrum for SLB shares to a higher risk category.

Do your portfolio a favor: Let the falling knife do its damage to someone else’s portfolio and take a pass on SLB for now.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2015/01/3-stocks-to-dump-aapl-vz-slb/.

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