Easily one of the most uncomfortable topics, investors need to consider stocks to sell in June. Understandably, some folks are deeply attached to their favorite market ideas. However, the problem here is that by holding onto losing entities, the rest of your portfolio might suffer.
Instead, market participants should take an emotionally agnostic approach to the equities sector. Once you identify overvalued stocks to sell, you might be better off acting quickly. After all, the rest of Wall Street absolutely gives no concern about your feelings toward particular enterprises.
Indeed, when it’s time to exit, other investors are more than happy that you’re willing to hold the bag. Crudely, the more bag holders that exist, the higher the exit price for the bears. Basically, you don’t want to do anyone any favors. On that note, below are the stocks to avoid in June.
As one of my favorite places to shop, putting Target (NYSE:TGT) on a list of stocks to sell in June doesn’t bring me joy. However, social realities force my hands. A few weeks ago, management disclosed that thievery will end up costing the retailer $500 million in profits this year. As well, Target CEO Brian Cornell mentioned that violent incidents have increased at its stores.
In prior social paradigms, the answer may have been beefed-up security or calls for more police officers. Honestly, there’s really no other solution. For crime to stop, society must impose deterring penalties. Instead, the current protocol takes into account a holistic view of law enforcement, which puts officers in awkwardly dangerous circumstances. Unsurprisingly, fewer people now want to pursue careers in law enforcement.
Invariably, then, Target may have to continue closing stores found in problematic areas. Clearly, TGT investors have had enough, sending shares down 20% in the trailing month. Without realistic answers to the problem, TGT is one of the stocks to avoid in June.
Although online used-car retailer Carvana (NYSE:CVNA) generated positive headlines recently thanks to management boosting its second-quarter guidance, the pop higher – while incredibly robust – was also short-lived. On the June 9 session, CVNA dropped more than 21% in equity value. Basically, while speculators took the opportunity to scalp a quick buck, arguably most folks have serious viability concerns about CVNA.
Despite the impressive one-day rally on June 8, investors should consider CVNA as one of the stocks to sell in June. While the company makes some enticing promises, the overall reality is that Carvana sits in the distressed territory. Its cash-to-debt ratio comes in at 0.06 times, worse than 90.17% of its peers. Also, its Alman Z-Score pings at 0.68, which indicates a higher risk of bankruptcy within the next two years.
Also, let’s not forget that once the Covid-19 catalyst – which saw people rush to buy private vehicles for safety concerns – for Carvana crumbled, the crisis forced the company to accept unfavorable financing terms just to survive. Laden with debt that’s essentially junk-rated, Carvana will need more than a good quarter. Thus, it’s one of the risky stocks to sell.
Blue Apron (APRN)
Based on an immediate framework, Blue Apron (NYSE:APRN) might not seem like one of the stocks to sell in June. Last Friday, APRN popped up over 67%. As CNN explained, the company paid off its debt. It also plans to streamline its business with job cuts, restructuring, and asset sales. Basically, with Blue Apron becoming an asset-light enterprise, it can focus on the growth of its direct-to-consumer meal kit delivery business.
Even with this development, I believe it’s one of the overvalued stocks to sell. Priced at 17.9-times tangible book value (making it worse than 96% of its peers), investors will be paying a steep price for a troubled enterprise. Adding to the misery, Blue Apron’s three-year revenue growth rate on a per-share basis sits at 28.7% below zero. This stat ranks worse than 92.71% of its peers.
Moreover, this garish red ink also confirms that debt has never been the company’s worst problem. For example, back in 2017 when Blue Apron had $124.7 million in debt, it also held $228.5 million in cash and its equivalents. Rather, the main headwind is growth amid challenging circumstances such as inflation and rising food prices.
Bed Bath & Beyond (BBBYQ)
Sometimes, you have to know when to call it quits. That’s true in most things in life but especially the capital markets, as InvestorPlace Financial News Writer Samuel O’Brient mentioned regarding beleaguered retailer Bed Bath & Beyond (OTCMKTS:BBBYQ). As my colleague stated, the struggling retailer declared bankruptcy, forcing Nasdaq to delist its security. It later popped up in the over-the-counter market as BBBYQ. Apparently, traders are still pushing for a short squeeze.
Look, a short squeeze might materialize or it might not. I don’t believe a reliable mechanism to decipher this beforehand exists. So, I’m not suggesting that investors should short BBBYQ. However, it’s easily one of the stocks to sell in June, especially if you get the pop you’re looking for. As O’Brient stated, the writing is on the wall.
Realistically, Bed Bath & Beyond could sell its Buybuy Baby brand as it has some value. However, the main brand will be nothing more than a memory. With such a competitive market in retail, BBBYQ stock appears to be delaying the inevitable. Thus, if you’re going to sell high-risk stocks, this would be it.
While seemingly everyone loves talking about electric vehicles representing the future of mobility, the hard reality may be that too many competitors exist in the space. At some point, major consolidation needs to occur. At the same time, some companies just might disappear altogether. Potentially, EV maker Arcimoto (NASDAQ:FUV) belongs on this ignominious list, making it one of the stocks to sell in June.
I’m not sure if any Arcimoto apologists are out there. Presumably, a year-to-date loss of 47% and a trailing one-year loss of nearly 98% knocked out most enthusiasm for FUV. To be fair, on a per-share basis, Arcimoto’s three-year revenue growth rate clocks in at 39.7%, beating out 94.74% of its peers. However, the problem is that its operating and net margins sit deeply in negative territory.
Because the company consistently loses money, its free cash flow is in the red ink, quarter after quarter, year after year. It has a retained loss of nearly $174 million as of its first quarter of 2023. Without a realistic path to profitability, I’m afraid FUV ranks among the stocks to avoid in June.
Astra Space (ASTR)
On paper, launch vehicle specialist Astra Space (NASDAQ:ASTR) might not seem like one of the stocks to sell in June. As a member of the burgeoning space economy, Astra presumably commands an extremely large total addressable market. According to various sources, the broader space ecosystem could hit a valuation of $1 trillion by 2030. Still, not every sector participant will likely succeed.
For investors, the chart performance of ASTR presents a major distraction. Since the January opener, shares declined by nearly 9%, which isn’t too bad. However, in the trailing year, it’s down almost 75%. Since its public market debut, ASTR hemorrhaged 96% of its equity value.
Financially, circumstances look less enticing. Currently, Astra Space’s three-year EBITDA growth rate lands at 68.5% below breakeven. That’s worse than over 95% of its peers. Further, ASTR trades at 19.64 times trailing sales. That’s worse than 93.14% of the competition, making ASTR one of the overvalued stocks to sell. With a retained loss of nearly $1.9 billion as of Q1 2023, Astra lacks a realistic path to profitability.
As a cryptocurrency mining company, Bitfarms (NASDAQ:BITF) unfortunately makes for a relatively easy case for stocks to sell in June. To be clear, I’ve been an early supporter of the blockchain ecosystem. However, I also call it like it is. Understanding how wildly cyclical this market is, it’s important to take an agnostic view of this space. Otherwise, cryptos can eat you alive.
Fundamentally, my issue with Bitfarms isn’t so much about the enterprise itself as it is about the underlying sector. Unfortunately, crypto mining firms don’t do so well if the underlying digital assets don’t perform up to snuff. Just based on this dynamic, I believe BITF to be one of the risky stocks to sell. Another point centers on the regulatory dilemma that has clouded the crypto arena recently. First, the U.S. Securities and Exchange Commission (SEC) came after Binance and later Coinbase (NASDAQ:COIN). To be sure, hardcore proponents will simply protect their holdings via cold storage.
However, by doing this, market activity for virtual currencies may diminish. If so, the market value of individual cryptos may tank, thereby making BITF one of the stocks to avoid in June.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.