The broad market has been content to simply drift sideways since July, but the last couple months of the year tend to be bullish ones for stocks. The S&P 500’s average bottom line for November is a 1.35% gain, and the typical December dishes out a 1.54% advance. It’s the most bullish two-month span the market has to offer.
Not every stock is well-positioned to do well in the coming two months, however.
A handful of stocks haven’t been stuck in a rut, and in fact have spent the past several weeks making forward progress even without the broad market’s help.
Problem is, those gains achieved in the recent past have left the tank empty for further gains in the immediate-future. Indeed, some of them are ripe for a pullback.
Here are nine stocks to sell because … well, they don’t have much (if any) upside to offer.
Stocks With No More Profits Left for You: Netflix (NFLX)
In response to its third-quarter earnings beat announced last week, Netflix, Inc. (NASDAQ:NFLX) shares jumped 19%. Since then, they’ve tacked on another 7%, reaching new highs for the year in the process.
Buy a harsh reality is brewing on both fronts, and once they make landfall, it could make things rough for NFLX.
As for the potential buyout, if there’s anything we learned from the announcement that AT&T Inc. (NYSE:T) is buying Time Warner Inc (NYSE:TWX), if a deal is going to be done, it’s going to materialize very quickly. The fact that Netflix still hasn’t been acquired after a lot of chatter speaks volumes.
With or without the potential purchase factored in, Netflix is still a $54 billion company that turned a mere profit of $141 million for the past four quarter. That’s not much. And the company has made it clear it’s going to continue spending heavily for the foreseeable future. Total content obligations now stand at $14.4 billion.
Stocks With No More Profits Left for You: Petrobras (PBR)
Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) — better known as just Petrobras — is the Brazilian oil company that had been doubly dogged for the prior couple of years. Not only was the entire energy sector battered when the price of oil began to plunge in late 2014, but partially state-owned Petrobras was further disrupted by political turmoil in Brazil that ended with the nation’s president being ousted for what amounts to fraud.
And yet, PBR shares are up 183% year-to-date.
The prompt for that much bullishness is a combination of a rebound in the price of oil, and a ray of hope for an economic rebound in Brazil.
Investors may have the right idea by placing bets on Petrobras, but a rally of that size in that timeframe suggests the bulls have gotten a little ahead of themselves. PBR is one of a few stocks to sell now rather than later.
Stocks With No More Profits Left for You: International Game Technology (IGT)
There’s a good chance you’ve used technology made by International Game Technology (NYSE:IGT) without even realizing it. IGT is the name behind casino games like slot machines and video poker, self-service lottery ticket vending machines and book-management.
It’s not a bad business to be in. Indeed, gambling seems to be a recession-proof business, and International Game Technology has a steady (even if not perfect) streak of revenue growth to show for it.
It’s going to keep getting better, too. Earlier this month, IGT reached a cross-licensing agreement with Aristocrat, signed a six-year contract extension with the Texas Lottery and signed another cross-licensing agreement with Everi Games.
The combination of all that news is a big reason why IGT shares have gained 16% in October to-date, and are now up more than 50% since the middle of the year.
There are limits, however, and for the time being, International Game Technology belongs on a list of stocks to sell. (But after a decent pullback, IGT is worth owning.)
Stocks With No More Profits Left for You: NXP Semiconductors (NXPI)
NXP Semiconductors NV (NASDAQ:NXPI) isn’t exactly one of the more familiar names within the semiconductor industry. In fact, some investors may have never even heard of the Netherlands-based tech company. It sports a market cap of $35 billion, though, so it’s not as if it’s an obscure player in a crowded field.
More relevant right now, NXPI is up 24% since late September, with most of that gain materializing on Sept. 29 when chatter that Qualcomm, Inc. (NASDAQ:QCOM) was interested in an acquisition first surfaced.
Just like so many other buyout rumors we’ve heard about this year, the odds of this one happening aren’t strong enough for NXP to stick with it. There’s a lot more downside to upside here.
Stocks With No More Profits Left for You: Mentor Graphics (MENT)
Maybe it is. If Mentor Graphics — best known for its electronic design automation software — is on the auction block, though, it’s not apt to sell for much (if any) premium above and beyond its current price. Most acquisitions are etched in stone within a matter of days of rumors surfacing.
Mentor Graphics is also suspiciously losing ground, on the top line and the bottom line. It’s not inherently viewed as a growth driver for any would-be buyer. Any suitor would have be stepping into a relatively big project.
Stocks With No More Profits Left for You: TD Ameritrade (AMTD)
Rising rates — or even the mere prospect of rising interest rates — is known to be bullish for banks.
What most investors may not fully appreciate, however, is that higher rates are just as bullish (if not more bullish) for brokerage firms like TD Ameritrade Holding Corp. (NASDAQ:AMTD). Most brokerage houses manage their own lucrative money market funds that benefit the same say banks do from strong interest rates.
That’s a big part of the reason AMTD shares have dished out a 30% advance since the middle of the year, moving within sight of new 52-week highs … the prospect of a rate hike has been palpable since then.
Thing is, any boost in the Fed’s foundational rate is going to be a one-and-done affair — at least for a long while. The positive impact of any increase in interest rates is apt to already be priced in.
As a note, the market also isn’t reacting favorably to its $4 billion acquisition of rival discount broker Scottrade.
Stocks With No More Profits Left for You: Teck Resources (TCK)
Mineral and metal miner Teck Resources Ltd (USA) (NYSE:TCK) has been on a heroic run this year, rallying from $3.86 this year to the current price of $20.50. That’s a 430% romp, and the stock never really looked back between there and here.
The prod for the recovery? Well … therein lies the problem.
The stock has been on a roll, but it’s not as if its key operations like coal, copper, zinc and even solar power plants are on the mend in terms of pricing. Likewise, the company’s fiscal results have continued to deteriorate, and aren’t expected to vastly improve in the foreseeable future.
Yes, TCK has been upgraded by two different analytical firms within the past week. That only exacerbates the “as good as it gets” dilemma, though.
Teck Resources is at the top of a list of stocks to sell, as the enormous gain has made it far too vulnerable to profit taking.
Stocks With No More Profits Left for You: Match Group (MTCH)
Match Group Inc (NASDAQ:MTCH) is the name behind several online dating sites including Match and Tinder. The company only went public in November, and although it got off to a rough start, by early February it had put that weakness in the rear-view mirror and was en route to what’s been a huge 110% advance.
As is commonly the case with fresh IPOs, however, the premise of the business idea can obscure problems the company may have. And there are two red flags waving with Match Group here.
One of them is the uncertainty that the all-important millennial crowd will pay up for online dating apps. The other is taking aim at an unproven market made up of older and wealthier singles. It’s a little late in the game, however, to not know for sure where your growth is going to come from, or if it’s going to come from anywhere.
Any stumble with that growth plan could pull the rug out from underneath the rally effort.
Stocks With No More Profits Left for You: Texas Capital Bancshares (TCBI)
Last but not least, regional bank Texas Capital Bancshares Inc (NASDAQ:TCBI) topped last quarter’s earnings estimates even though it fell short of revenue estimates. The top line and the bottom line were also both up on a year-over-year basis for the recently completed third quarter.
It all sounds like good news … on the surface. A closer look at last quarter’s numbers, however, indicated that expenses are rising a little too much. This problem is becoming more chronic than many investors realize — and the credit quality of its loan portfolio is deteriorating as well.
Those red flags weren’t a problem for shareholders at the end of last week, when Q3 numbers were unveiled. Friday’s 4% gain translates into a 100% gain since February’s low.
Between a non-existent dividend and a trailing P/E of 20, though, some profit taking could be in the cards soon.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.