We are now rolling into the fourth quarter of 2017, and the new year is just around the corner. Now is the time to start preparing your portfolio for 2018, so which struggling stocks is the smart money telling you to avoid?
I set out to pinpoint 10 of the worst-performing stocks in the market right now. I wanted to find stocks that are set to go one way in 2018: down. At the very least, there are better places to invest then the stocks listed below (see for example my article on 10 stocks to buy for 2018!)
To pinpoint these honey traps, I turned to two of TipRanks most popular tools: the Stock Screener and the Trending Stocks tool. However this time, I set the filters to find only stocks with a hold or sell consensus. On the trending stocks tool, I looked for the Street’s worst-rated stocks over the last month. These are the stocks that are buzzing right now, but for all the wrong reasons.
Now let’s take a closer look at these 10 stocks to sell for 2018:
Smart Money Stocks to Sell: Twitter (TWTR)
Twitter Inc (NYSE:TWTR) is not a stock you want in your portfolio. In the last two weeks alone, the stock has received three sell ratings from top analysts. At the same time, its abysmal average analyst price target of $15.35 suggests over 12% downside from current prices.
Five-star Aegis Capital analyst Victor Anthony is behind the stock’s most recent sell rating. His bearish $13 price target undercuts the current share price by almost $5.
Twitter has an “uphill battle” to win over advertisers says Anthony. He has been talking to ad industry execs to get their insights. The conclusion is that TWTR faces “a tough competitive environment for online ad dollars” due to rivals like Amazon.com, Inc. (NASDAQ:AMZN) and Snap Inc (NASDAQ:SNAP).
“One advertiser noted that Twitter’s management has not quite made the case for shifting meaningful ad dollars to Twitter,” writes Anthony. Add in the fact that user growth is limited and the picture becomes doubly worrying. “Our MAU [monthly average user] tracker points a slight sequential improvement in MAUs in 3Q17, but not enough to suggest a turnaround is imminent” the analyst concludes.
Twitter has just revealed that it is developing a bookmarking feature. This is described by Twitter as a “new way to save tweets to read later.” But from an investor perspective it seems too little too late to make Twitter a worthy portfolio stock.
Smart Money Stocks to Sell: Chipotle (CMG)
Struggling food chain Chipotle Mexican Grill, Inc. (NYSE:CMG) has just received its lowest price target yet. Four-star Cowen & Co analyst Andrew Charles reiterated his sell rating on Chipotle with a $250 price target on Oct. 6. This translates into big downside from the current share price of close to 18%.
According to Cowen & Co the public haven’t moved on from Chipotle’s E. coli scandal two years ago. “Despite new food safety protocols, enhanced marketing efforts, and new menu additions, no tangible initiative over the past 18 months has managed to reverse, let alone marginally improve, overall respondents’ perceptions,” says Charles.
Only this month, Chipotle rolled out its new Tex-Mex queso to a slew of bad consumer reviews. “When you compare it to the more synthetic ones, it’s got a different texture,” said Mark Crumpacker, Chipotle’s CMO. “But it’s melted cheese, and that’s what actual cheese taste like.” Nonetheless, analyst Andrew Charles noted that the traffic lift caused by the queso launch topped out at the end of the first week and then softened.
On the whole analysts are nervous about the stock’s outlook. On TipRanks, CMG has a hold consensus rating and a price target of $387.45. Shares are now trading at $310, down from a peak of $730 back in 2015.
Smart Money Stocks to Sell: F5 Networks (FFIV)
This innovative tech company ensures that applications are always secure and perform the way they should. However, F5 Networks, Inc. (NASDAQ:FFIV) is suffering as “product revenue appears mired in minimal growth, and we see a lack of fundamental catalysts.” So says top Oppenheimer analyst Ittai Kidron.
Kidron comments that “channel checks leave us cautiously optimistic, and we believe management likely lowered the bar enough to make expectations achievable, decreasing the likelihood of another miss.” However, he notes that “with a tough macro environment and cloud pause highlighted last quarter, we’d wait for more concrete evidence of the product cycle boost kicking in before getting more positive.”
Ultimately this means that there is limited downside but little upside either. As a result, Kidron reiterates his hold rating on Oct. 2 without a price target. The key takeaway here: there are more exciting investing opportunities for your money right now than FFIV. Overall the stock has a Hold analyst consensus rating. In the last three months analysts have published three buy, nine hold and one sell rating on FFIV.
Smart Money Stocks to Sell: Bed Bath & Beyond (BBBY)
If you haven’t heard of Bed Bath & Beyond Inc. (NASDAQ:BBBY) before, you have now. BBBY owns a chain of retail stores across the U.S., Puerto Rico, Canada and Mexico selling household goods.
Share prices have almost halved in the last year — and the outlook for 2018 doesn’t look encouraging either. With consumers rapidly turning to online shopping, BBBY has no buy ratings but plenty of hold/sell ratings. TipRanks gives BBBY an analyst consensus rating of moderate sell.
Morgan Stanley analyst Simeon Gutman recently reiterated his “sell” rating on BBBY. At the same time, he slashed his price target from $30 to $23 (3% upside from the current share price). He pointed out that store traffic is getting worse rather than better leading to gross margin contraction.
Gutman also notes that the home furnishing space is very competitive, and this leads him to be skeptical about BBBY’s turnaround prospects.
Smart Money Stocks to Sell: Viacom (VIA)
The future looks break for Viacom, Inc. (NASDAQ:VIA). This broadcasting and cable giant is now trading at a seven-year low due to “the death of TV.” Share prices tumbled following a downgrade from top Citigroup analyst Jason Bazinet. He now has a “sell” rating on VIA and a $24 price target (6.2% downside from the current share price). According to Reuters, Bazinet cited risks that pay TV firms would stop carrying its channels.
And Bazinet is not the only analyst feeling bearish. Top Pivotal Research analyst Brian Wieser has a “hold” rating on VIA. He gives this blunt analysis: “Investors in Viacom are subject to risks related to the hit-driven nature of video programming, perceptions around the “death of TV,” and a deceleration in the growth of pay TV subscriptions in the U.S. and around the world. Control and governance issues are also a risk factor for Viacom shareholders.”
If we turn to TipRanks, we can see that the stock has a hold analyst consensus rating. In fact, in the last three months, VIAB has received one buy, eight hold and two sell ratings.
Smart Money Stocks to Sell: Symantec Corp (SYMC)
Cyber security company Symantec Corporation (NASDAQ:SYMC) is not looking so secure itself right now. The massive Equifax Inc. (NYSE:EFX) data breach led to a spike in security stocks. SYMC, for example, is up 19% in the last 30 days — and now looks overvalued say analysts.
As a result, this California-based company has just received two downgrades. Top Cowen & Co analyst Gregg Moskowitz dealt his blow to SYMC on Oct. 9. He downgraded his rating to “sell” with a $31 price target (1.7% downside). And this is an analyst that knows what he is doing. On TipRanks, he comes in at No. 296 out of 4,693 tracked analysts.
According to Moskowitz, “Recent history has shown that consumers’ sense of urgency with respect to security purchases is typically short-lived… We also find it difficult to justify $2.2 billion of incremental market cap for an estimated $60m in annualized billings.” He adds that Symantec’s “organic” revenue growth still “remains sluggish.”
Meanwhile, Standpoint Research analyst Ronnie Moas downgraded SYMC to “hold.” He sees limited upside potential for the stock, which is currently trading at 17x next year’s estimates. His analysis is confirmed by the average analyst price target of $32 (1% downside from current price).
Smart Money Stocks to Sell: Campbell Soup (CPB)
As the name suggests, Campbell Soup Company (NYSE:CPB) is the company behind the iconic red and white soup cans lining supermarket shelves. Shares in the company have plunged recently from $63 in February to the current share price of $45 as sales continue to disappoint.
According to Campbell Soup CEO Denise Morrison, this is a tricky time for food companies. She says the retail environment is very aggressive and “top line growth scarce… in an extraordinarily difficult operating environment.”
The company is suffering from the move to online shopping and consumers opting for healthier food choices: “Consumers continue to migrate to fresher and healthier foods found on the perimeter of food stores. Like the majority of our peers, early in the calendar year, we experienced significantly lower consumption across almost all of our categories” says Morrison.
Her analysis is reflected by the Street. The stock has a firm “hold” analyst consensus rating with no recent buy ratings. And at the beginning of September, Deutsche Bank analyst Robert Dickerson lowered his price target for Campbell Soup to $51 from $58. He notes management’s cautious tone and believes that 2018 will largely be an investment year. Dickerson concludes there are a “number of upcoming headwinds” for CPB.
Smart Money Stocks to Sell: Life Storage Inc (LSI)
Self-storage company Life Storage Inc (NYSE:LSI) promises clean and secure self-storage units at over 700 locations across the U.S.
Following the hurricanes, share prices in LSI rose. The market speculated that there will be an increase in short-term demand for self-storage assets in affected areas. For example, homeowners, contractors and suppliers will all need to store items as reconstruction commences.
However, this increase will be offset by damage expenses and lost revenues as a result of store closures, says Cantor Fitzgerald analyst Gaurav Mehta. Fourteen of the stores have been closed as a result of hurricane damage says Mehta. Meanwhile, FBR Capital David Corak downgraded LSI to “sell “with a $70 price target (14% downside).
“We believe that the recent ~10% runup in LSI (and the self-storage sector), driven by the hurricane trade, is overdone and that the sector is due for a near-term correction” says Corak. He adds: “we expect decelerating fundamentals in the company’s remaining portfolio to continue into 2019; we generally see a lack of positive catalysts near term… we think there are better places to allocate capital for the time being.”
The stock has a moderate sell rating on TipRanks. In the last three months, analysts have published five hold ratings and four sell ratings on the stock. The average price target works out at $72.71 — nearly 11% below the current share price.
Smart Money Stocks to Sell: Boston Beer (SAM)
Boston Beer Company Inc (NYSE:SAM) is the U.S.’s second-largest craft brewery. It is also the company behind Sam Adams beer, named after the famous American revolutionary patriot Samuel Adams. However, SAM is suffering as the number of craft breweries has now exploded to over 4,000 in the U.S. alone.
Back at the end of September, speculation of a takeover surfaced after comments from Credit Suisse analyst Laurent Grandet. “Founder Jim Koch has been publicly vocal about his aversion to selling the company to a larger beer brewer, but we think eventually he could soften his stance on this if the relaunch (of the brand’s marketing) is eventually unsuccessful” says Grandet.
The analyst added: “We remain cautious on the trajectory of the business in 2018 and beyond. Samuel Adams brand is declining in both retail and on-premise and we don’t think this could improve before mid-2018.” Grandet has a “hold” rating on SAM and a $150 price target (10% downside). This is slightly more positive than the overall analyst consensus rating on TipRanks of moderate sell.
Smart Money Stocks to Sell: TripAdvisor Inc (TRIP)
TripAdvisor Inc (NASDAQ:TRIP) boasts that it is the world’s largest travel site. However, the outlook is not looking so rosy for this slipping stock. On Oct. 3, Citibank analyst Mark May added a negative Catalyst Watch to TRIP. The stock is at risk from increasing marketing spend on TV ads says May. He is also concerned about rival travel company Priceline Group Inc (NASDAQ:PCLN). Unfortunately for TRIP, Priceline is trying to move from hotel metasearch to branding and building direct relationships.
Note that Mark May is a top analyst to track according to TipRanks. He is ranked No. 328 out of 4,693 analysts based on his impressive 69% success rate and 13% average return.
And May’s “hold” rating reflects the overall view on TRIP from the Street. In the last three months, 11 analysts have published hold ratings and three have sell ratings. Meanwhile the average analyst price target of $39.80 suggests the stock has 3% to fall over the next 12 months. So watch out!
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,500 analysts, 5,000 financial bloggers and even 37,000 corporate insiders. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.