Identifying stocks to sell can be complicated, especially in this uncertain environment. We’ll be looking at three.
The first business focuses on retail and faces challenges due to the economy, pandemic-related issues, and supply chain instability. The second business strives to transform the culinary industry with plant-based options but needs help with customer understanding, finances, and competition. Finally, the third business dreams of commercial space travel but faces financial imbalances, a limited customer base, and technological obstacles that could hinder its cosmic goals.
This article delves into the intricate challenges these three companies face with a fundamental narrative that goes beyond stock price fluctuations. Here are the stocks to sell:
Big Lots (BIG)
The American furniture and home decor retailer Big Lots (NYSE:BIG) faces several long-term challenges that could harm its fundamental outlook. Macroeconomic headwinds negatively impact the company’s performance, eroding consumer confidence. These challenges have led to weaker demand for higher-ticket purchases, hurting sales across categories like furniture and seasonal items.
Additionally, Big Lots is struggling to recover from the effects of the pandemic. The company experienced a surge in sales during the pandemic due to higher ticket purchases. However, these effects are now softening or reversing. Furniture and seasonal items, which were strong growth drivers during the pandemic, are no longer performing as well.
It’s important to note that suspending dividends and selling assets help Big Lots deal with the current economic difficulties. Although these actions may help increase the amount of available funds, they could also result in a decrease in investor trust. As a result, getting access to capital for future growth plans might become more complex.
In addition, the company is experiencing disruptions in its supply chain, primarily due to product shortages from vital vendors such as United Furniture Industries. As a result, these supply chain issues negatively affect the company’s ability to meet consumer demand, resulting in lost sales and financial pressures.
Big Lots is taking decisive steps to tackle these challenges. This includes cutting costs by shutting down distribution centers and finding ways to save on structural expenses. These measures are helping to reduce the negative effects of some obstacles. However, the company’s future is still uncertain because of the unpredictable economic situation and ongoing issues with the supply chain. Thus, it is one of the best stocks to sell right now.
Beyond Meat (BYND)
Beyond Meat (NASDAQ:BYND) faces long-term fundamental challenges that could harm its performance. Despite the company’s efforts to position itself for growth and efficiency improvements, several factors impact its prospects.
Net revenues for Beyond Meat have declined significantly. This can be attributed to weaker demand, increased competition, and the cycling of solid previous quarters. These factors have raised concerns about the company’s ability to maintain consistent revenue growth and capture and retain market share in the highly competitive plant-based meat industry.
Despite efforts to reduce costs, Beyond Meat’s gross margin remains relatively low due to various factors. It includes lower net revenue per pound and certain transitory impacts. This indicates challenges in maintaining profitability and could impact the company’s ability to invest in research, innovation, and marketing.
It’s also worth noting that the company is aware of the confusion and misinformation regarding the health benefits of plant-based meats. Even though they’ve tried to emphasize the nutritional advantages of their products, there still needs to be a disparity between what consumers believe and the potential health benefits. This discrepancy can affect consumer acceptance and growth in the plant-based meat industry.
Moreover, Beyond Meat is confronted with economic obstacles such as inflation and increased interest rates that may limit the purchasing power of consumers.
It’s also essential to tackle the overall story surrounding plant-based meat products and combat negative opinions. The company’s strategy involves educating consumers and forming partnerships to dispel misconceptions about these products. However, changing people’s attitudes towards plant-based meats is a complicated and gradual process. Beyond Meat recognizes that shifting from early adopters to mainstream consumers can take longer than anticipated.
Virgin Galactic (SPCE)
Virgin Galactic (NYSE:SPCE) has demonstrated progress in its spaceflight operations and achieved significant milestones. However, several concerns cast doubt on its long-term prospects.
Although Virgin Galactic has achieved successful missions such as Unity 25 and Galactic 01, it is essential not to overlook the more considerable challenges. The company’s revenue has been modest, only generating around $2 million in the second quarter. Operating expenses have increased significantly due to higher research and development costs. This imbalance between revenue and expenses raises concerns about whether the company can achieve long-term profitability soon.
Also, the financial performance reflects uncertainty regarding the demand for Virgin Galactic’s services. Despite aspirations to broaden access to space for private individuals, the customer base remains relatively narrow. The cost positioning of the suborbital space lab product, while seemingly attractive, might need to be revised to attract a substantial and consistent stream of customers, especially given the high expectations associated with space travel experiences.
The space tourism industry is experiencing a rapid evolution in its competitive landscape, with established aerospace giants and innovative startups entering the market. This intensifying competition could impact Virgin Galactic’s market share and pricing power, potentially affecting its growth trajectory.
The company has made progress in its technological advancements. Still, there are concerns that the delays in its Delta Class spaceship development may dampen its growth commitments. Building and certifying new vehicles is a complex undertaking with inherent risks, which could further burden the company’s financial resources and investor trust.
The recent loss of Evan Lovell, the Chair of the Board, has created more uncertainty regarding the company’s future leadership and direction. Appointing an interim chair could disrupt decision-making and cause concern among stakeholders. This makes it one of the top stocks to sell in my book.
On the date of publication, Yiannis Zourmpanos did not hold (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.
