If you read the latest news, you’ll swear that now is the time to buy into the markets. Primarily, the political wheels in both Washington and Beijing are turning, suggesting a pathway toward a trade war resolution. Yet even with this positive development, you may still want to consider stocks to sell.
First, the trade dispute between the U.S. and China has lasted 17 months. I’m not really sure what has changed that would bring the two sides back to the negotiating table. Moreover, we’ve seen many head-fakes along the way. Although it now appears unlikely, it wouldn’t be surprising to see talks fail yet again. Thus, keeping your hands on stocks to sell isn’t a bad idea.
Second, most analysts would agree that the financial markets operate in cycles. Since we’re already riding on the longest bull market in history, the probability of a substantive correction naturally increases. After all, few people thought the market would collapse last decade, yet everyone saw what happened then.
Finally, it’s never a good idea to get complacent with the markets, nor to get too emotionally vested. Like the tide, equities rise and fade. And with perhaps misplaced confidence coming into the picture, now is the time to go contrarian.
With that, here are seven stocks to sell before they roll over:
Tesla (TSLA)
Undoubtedly one of the most emotionally-driven investments on Wall Street, Tesla (NASDAQ:TSLA) has both thrilled and tormented traders. Currently, TSLA stock is doing the former. With a surprising earnings performance for its third quarter, it implies that Tesla is finally focusing on the fundamentals. Still, I’d put shares on my list of stocks to sell.
Bear in mind that I don’t hate the company. Over the years, I’ve praised Elon Musk’s genius. Also, if I were to buy an electric vehicle, I’d buy a Tesla: their cars are drop-dead gorgeous.
Having said that, I have an issue with the EV industry overall. In my opinion, the infrastructure to support EVs on a mass scale doesn’t exist. Likely, it won’t exist for many years to come. Thus, the lack of infrastructure would necessarily cap the potential of TSLA stock.
But lately, the California wildfires have put all electricity-based platforms into question. Essentially, fossil-fueled cars have a separate energy source from the electrical grid. But what happens to EVs when that grid goes down? This is not a hypothetical question anymore, which is why I’m hesitant on TSLA stock.
Nio (NIO)
Many if not most people refer to Nio (NYSE:NIO) as the “Tesla of China.” If that’s the case, you may want to consider putting NIO stock on your list of stocks to sell.
As with its American counterpart, I don’t necessarily hate Nio. Similar to Tesla, I believe Nio cars are absolutely stunning. Also, I think we should give credit where it’s due. In rapid fashion, China went from an unknown in the automotive industry to a bona fide juggernaut. Further, China holds the world’s largest automotive retail market.
But is that enough to save NIO stock? For one thing, the infrastructural issues that I cited for the U.S. market applies to China. But more than that, the Chinese government will wind down incentives for EVs and plug-in hybrids by the end of next year.
Thus, I think it’s a hard sell to convince consumers that a) they may not have robust infrastructure for some time, and b) they won’t get any incentives for their troubles. I think the writing is on the wall: just avoid NIO stock before things get worse.
First Solar (FSLR)
In recent years, we’ve seen a dramatic push for alternative energy sources and platforms. Moreover, this drive has a political element to reduce our carbon footprint. With all this, First Solar (NASDAQ:FSLR) appears to have the right solution. Getting free energy from the sun, you never have to worry about resource depletion.
Still, I wouldn’t rush into FSLR stock. If anything, I’d consider writing this name down on a portfolio of stocks to sell. Although First Solar has enjoyed a solid year – shares are up double digits since the start of January – the company has tripped since August.
Overall, the revenue performance of the company has left much to be desired. In addition, free cash flow is consistently and worryingly negative.
But from a longer-term perspective, what hurts FSLR stock is the industry’s economics. Even with tax credits, solar equipment isn’t cheap. Moreover, if you don’t have a large electricity bill, the numbers don’t make sense for all people.
And this segues into another point why I put FSLR stock in this list of stocks to sell. Millennials haven’t embraced home ownership like prior generations. Thus, they’re largely living in apartments or condominiums where the solar case is diminished.
Pier 1 Imports (PIR)
When I was single, you wouldn’t find me anywhere near a Pier 1 Imports (NYSE:PIR) store. Having been domesticated via marriage, I have occasionally visited my local Pier 1. What can I say? If you’re looking for trendy tableware at reasonable prices, you’ve come to the right place.
But buying PIR stock? That’s another story altogether. As you might guess, I believe Pier 1 is a “perfect” candidate for stocks to sell.
First, the brick-and-mortar retail industry is already competitive thanks to disruptive e-commerce companies. But even more problematic for PIR stock, the underlying retailer doesn’t offer anything special to its customers.
That leads me to my second point: I really can’t distinguish between Pier 1 products and all the trendy living room and kitchenware products sold elsewhere. For instance, my wife and I love shopping at Cost Plus World Market, which is a Bed Bath & Beyond (NASDAQ:BBBY) subsidiary. Not only do they sell the same stuff as Pier 1, but they also have food.
Thus, I’m afraid PIR stock is becoming increasingly irrelevant. I’d use the recent upside in shares as an ideal exiting point.
Nautilus (NLS)
According to the Centers for Disease Control and Prevention, over 93 million Americans suffer from obesity. In addition, nearly 36% of young adults aged 20 to 39 years were obese. Theoretically, this is an environment where exercise-equipment maker Nautilus (NYSE:NLS) and NLS stock should thrive. I don’t need to remind everyone about the incredible health benefits of regular exercise.
Yet theory and reality don’t always mix. Since the early summer of 2018, NLS stock cratered, becoming one of the ugliest names among stocks to sell.
With shares down deep into single-digit territory, there doesn’t seem to be much reason to talk about NLS stock. However, shares recently popped up substantially in October. Therefore, it could inspire some folks to take the contrarian approach.
But even with the sharp discount in mind, I wouldn’t touch Nautilus. For one thing, revenue has continued to decline, scaring off investors. And why is that? Because keeping an exercise regiment is difficult to do, which even the Mayo Clinic admits. In other words, the investment case for Nautilus is a bit deceptive.
CBL & Associates Properties (CBL)
For obvious reasons, CBL & Associates Properties (NYSE:CBL) has in recent years occupied many lists of stocks to sell. With the rise of e-commerce companies like Amazon (NASDAQ:AMZN), people have less incentive to visit brick-and-mortar shops. This is especially the case for consumers shopping for discretionary items, such as electronic goods.
Naturally, with fewer people, you have fewer businesses to occupy shopping centers, eroding the case for CBL stock. Moreover, because people are increasingly buying discretionary items online, this circumstance negates secondary sales, or purchases made outside of a customer’s primary retailer.
But what I think really hurts the case for CBL stock, and why shares still belong in your portfolio of stocks to sell is their physical footprint. According to Worldpopulationreview.com, the top 10 fastest growing states are: Nevada, Idaho, Utah, Arizona, Florida, Washington, Colorado, Texas, South Carolina, and North Carolina.
However, CBL & Associates only has a presence in half of those states. In other words, if you’re operating in a declining market, you need to be in that market’s “meaty” zone. Instead, they’re unfavorably positioned, making CBL stock suspect.
Solid Biosciences (SLDB)
With the advancement of healthcare technologies, more sector-related companies have pushed the boundaries of science in the hopes of discovering treatments or cures for debilitating diseases. And one of the most pernicious conditions is muscular dystrophy. Among the organizations tackling this dreaded disease is Solid Biosciences (NASDAQ:SLDB), which has developed a drug called SGT-001.
I give all medical researchers working tirelessly to find cures my blessings. However, we must separate the sentiment of Solid Biosciences with SLDB stock. Unfortunately, the pharmaceutical world is full of dashed potential. And I’m afraid SGT-001 doesn’t look like it’s going anywhere.
Earlier this year, the drug produced adverse conditions in patients, representing a huge setback for the company. Not only that, Solid Biosciences has competitors in the space. Sarepta Therapeutics (NASDAQ:SRPT) is developing their solution for muscular dystrophy, as is pharma giant Pfizer (NYSE:PFE).
Finally, I can’t help but notice that Solid Biosciences doesn’t have any revenue and it’s bleeding cash. I’m not sure how long this can keep up without a breakthrough. Thus, SLDB stock regrettably belongs in your list of stocks to sell.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
