Blue-chip stocks are usually sturdy and reliable — But not always. Some well-run companies that are sector leaders fall behind. Whether it’s due to macroeconomic conditions, market forces or losing their competitive edge. Even stocks of companies that were once sure bets can turn on investors and fall into the red. While frustrating, the best defense against taking a position in a declining blue-chip name is spotting the downward trajectory and avoiding or selling a stock before any losses compound and worsen. This year alone, there have been many blue-chip stocks and household names that have fallen on hard times. Here are blue-chip stocks to sell now as they are poised to plunge.
Consider yourself warned.
The Home Depot (HD)
In a recent letter to investors, Eddy Elfenbein, who runs the AdvisorShares Focused Equity ETF (NYSEARCA:CWS) wrote: “The quarterly Home Depot (NYSE:HD) earnings report is, in my opinion, a better indicator of the economy than any government report.” He’s not alone. Many professional analysts, traders and investors view Home Depot’s earnings as a barometer for the health of the U.S. economy. Unfortunately, the latest quarterly print from the home improvement retailer was not encouraging.
In this year’s first quarter, Home Depot reported its biggest revenue miss in 20 years. The company blamed the disappointing result on the fact that consumers are buying fewer big-ticket items. This indicates that consumer spending could be slowing in the lead up to a possible economic recession. Things are already bad at Home Depot and, should we enter a recession, the company could become one of the blue-chip stocks to sell. Already, HD stock is down 7% on the year and sliding lower.
Oil had a great run in 2022, but the good times look to be coming to an end. After peaking at $122 a barrel in June of last year, crude oil prices have now declined to about $72 a barrel, though they have dropped below $70 on several occasions this year. After a year of record earnings, most oil companies are now seeing their share prices slip lower along with crude prices. This includes American oil major Chevron (NYSE:CVX), which has seen its stock decline 10% year to date.
Chevron and other oil giants are having to adjust their expectations and those of their shareholders as crude prices have come back down to earth. Recent news that Saudi Arabia plans to cut its oil production by one million barrels a day starting in July of this year barely moved the needle on prices. Another bad omen for CVX stock is that well-respected investor Warren Buffett realized it was one of the blue-chip stocks to sell during this year’s first quarter. He has since trimmed his stake in Chevron by 20% after buying shares in the company hand-over-fist in 2022.
There have been a lot of winners in the artificial intelligence (INTC). The legacy chipmaker is widely seen to have missed the boat on AI and continues to lose ground to rivals such as Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). Poor sentiment, which has been made worse by disastrous earnings reports, has sent INTC stock down 30% over the last 12 months.) race this year. But, if there’s been one loser, it’s Intel (NASDAQ:
Intel recently reported the biggest quarterly loss in its 55-year history, including a 133% decline in its earnings per share. Ironically, the Q1 print was not as bad as analysts had feared, which just goes to show how low expectations surrounding the company have gotten. As other chipmakers have seen their stocks bounce higher on growing demand for semiconductors and microchips to fuel advanced AI, INTC stock has gotten mired in the company’s difficult turnaround strategy and goal to eventually manufacture microchips with its own foundry.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.