In 2017, it was nothing but up, up, up. 2018 has been a different story though, with plenty of volatility coming back to the stock market. That’s left a healthy mix for both bulls and bears, along with traders and investors. Investors have dips they can buy, while traders can pick-and-choose which stocks are best. However, both should be aware of a few summer stocks to sell.
So what ones don’t we want to touch? Are these can’t-miss, no-brainer shorts? No, not necessarily.
But they’re not the stocks I would want to be long heading into the summer.
Summer Stocks to Sell: Snap
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Shares of Snap Inc (NYSE:SNAP) spiked on May 30th, nearly closing over $11. But that doesn’t do much to wash the stink off this stock. We’ve long advocated for investors to stick with Facebook Inc. (NASDAQ:FB) or Twitter Inc (NYSE:TWTR). In this case, FB is a best-in-breed name while Twitter is putting all the right pieces together.
Maybe Snap will put the right pieces together too. But so far, management has shown that not to be the case. CEO and co-founder Evan Spiegel may say he wants Snap to be profitable this year, but that seems like a futile endeavor.
Is SNAP stock a “summer stock to sell?” Well, I wouldn’t step up to short it at this point and the longs that have held it on the way down will be reluctant to sell near the lows. But this is certainly one I’d want to part ways with.
Over $11.75 could get SNAP into rally mode, but if $10.50 gives way, look out.
Instead, investors should consider Facebook or Twitter.
Summer Stocks to Sell: IBM
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I have been pretty open-minded with IBM and for the right investor, it still has its place in the portfolio. It yields 4.5%, finally has positive revenue growth and should grow its earnings this year and next. Albeit, revenue and earnings growth is pretty putrid though.
IBM has opportunities in the cloud and in blockchain technology. Further, its stock has paid the price for its lackluster growth profile. While I do think IBM has some potential going forward, along with some reasons to be optimistic, why buy it over so many other good names?
I would much rather be long Apple Inc (NASDAQ:AAPL), Box Inc (NYSE:BOX), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Salesforce.com, inc. (NASDAQ:CRM), Nvidia Corporation (NASDAQ:NVDA) or heck, even just the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ).
Summer Stocks to Sell: GE
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General Electric Company (NYSE:GE) is another name I want to avoid this summer.
Admittedly, some may be attracted to GE stock because shares are down roughly 50% and its yield is almost 3.5%. But keep in mind that GE has underperformed for a reason and its dividend was cut by 50% in November.
We thought that the stock may have bottomed, but GE proved difficult once again. If you can buy GE and hold it for 20+ years, then sub-$15 is probably a good deal. But there are still cash flow concerns, debt worries and zero growth plaguing this name. JPMorgan bear Stephen Tusa has been spot on General Electric so far, and he doesn’t believe the worst is necessarily over.
I don’t know if GE will make a new multi-year low below the $12.74 mark it hit earlier this year, but I don’t want to be around to find out. That’s even with the big rise in oil prices.
If you’re looking to enter this space, Honeywell International Inc. (NYSE:HON) may be a better fit.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long AAPL, BOX, GOOGL, CRM and NVDA.
