It’s that time of the year again. When the tulips rise, the sun breaks through winter’s chill, and the stock market enters what is seasonally a rough patch. Thus, “Sell in May and go away.”
The expectation of some price weakness ahead for the stock market is magnified by the historic rally out of the late-December lows, suggesting some profit taking is due. Moreover, corporate earnings growth has slowed, overseas economic data doesn’t look great, and geopolitical tensions are rising.
According to the folks at the Traders’ Almanac, since 1950 the Dow Jones Industrial Average has gained an average of just 0.6% between May and October vs. 7.5% between November and April. So there’s pretty powerful evidence to suggest investors take some chips off the table.
If so, consider these five names stocks to sell.
Harley Davidson (HOG)
Shares of motorcycle maker Harley Davidson (NYSE:HOG) have once again fallen below their 50-day moving average, setting up a possible break below a six-month uptrend that was turned just above its 200-day moving average. This comes in the context of a larger downtrend that started in early 2017.
The company will next report results on July 23 before the bell. Analysts are looking for earnings of $1.42 per share on revenues of $1.5 billion. When the company last reported on April 23, earnings of 98 cents per share beat estimates by 11 cents on a 10.1% decline in revenues.
Foot Locker (FL)
Foot Locker (NYSE:FL) shares are dropping below their March lows, threatening to end a three-year-long uptrend that fizzled out near resistance from a breakdown in early 2017. And this continues a pattern of sideways churn going all the way back to late 2014. Analysts at Citigroup recently resumed coverage with a downgrade and a price target cut.
The company will next report results on May 24 before the bell. Analysts are looking for earnings of $1.62 per share on revenues of $2.1 billion. When the company last reported on March 1, earnings of $1.56 per share beat estimates by 16 cents on a 2.8% rise in revenues.
Electronic Arts (EA)
Shares of video game maker Electronic Arts (NASDAQ:EA) were added to this list of stocks to sell when they were unable to break above its 200-day moving average, and is now rolling lower out of a three-month consolidation range near $100. Watch for a possible test of the late December lows, which would be worth a loss of more 20% from here. Investors are feeling a chill as U.S. spending on video games falls sharply from last year.
The company will next report results on May 7 after the close. Analysts are looking for earnings of 99 cents per share on revenues of $1.2 billion. When the company last reported on February 5, earnings of 86 cents beat estimates by 20 cents on an 18.4% decline in revenues.
Transportation stocks have been weak, with UPS (NYSE:UPS) among the victims falling below a six-month trading range to return to lows not seen since late January. This continues a sideways channel that has plagued the name since late 2016. Fears have focused around the uneven strength of the U.S. economy and competitive pressure from Amazon (NASDAQ:AMZN), its most important customer, who continues to widen its direct shipping presence.
The company will next report results on July 24 before the bell. Analysts are looking for earnings of $1.94 per share on revenues of nearly $18 billion. When the company last reported on April 25, earnings of $1.39 missed estimates by four cents on a 0.3% rise in revenues.
3M (NYSE:MMM) shares suffered a nasty post-earnings selloff last week, dropping 15% from their recent high. The company reported earnings of $2.23 per share, missing estimates by 27 cents on a 5% drop in revenues. Forward guidance was soft as well. Management is focused on the margins, cutting jobs and buying back shares, while the core business suffers from slow growth, extended margins, and structural issues.
The company will next report results on July 25 before the bell. Analysts are looking for earnings of $2.19 per share on revenues of $8.2 billion.
As of this writing, the author held no positions in the aforementioned securities.