Many once great stocks have lost their shine. Blue-chip companies that for years were reliable winners in the market have fallen on hard times and their share prices have steadily eroded. This can be extremely disappointing for shareholders who, after enjoying consistent gains, now find themselves deep in the red. The reasons for the downturns are varied and can include a loss of market share, declining competitive advantage, poor management, and even bankruptcy filings. Regardless of the reasons, the best thing investors can do when a stock declines over time is to cut their losses and move on. Here are seven blue-chip stocks to sell and never buy back.
Charles Schwab (SCHW)
Leading U.S. investment firm Charles Schwab’s (NYSE:SCHW) stock continues to be a letdown. Year-to-date, SCHW stock is down 33% compared to a 14% increase for the benchmark S&P 500 Index. While the shares look cheap at current valuations, the company’s most recent earnings report did not inspire confidence. For this year’s third quarter, Charles Schwab reported that its revenue declined 16% from a year earlier amid a “challenging environment.”
The company did report EPS of 77 cents that was better than the consensus expectation of 75 cents among Wall Street analysts. But revenue of $4.61 billion missed forecasts of $4.65 billion and was 16% lower than a year ago. Equally bad, Charles Schwab’s revenue from trading activities declined 17% to $768 million during Q3, while new brokerage accounts in the quarter were flat from a year ago but down 7% from the previous second quarter of this year. Consider adding it to your blue-chip stocks to sell now.
BlackBerry (BB)
The latest bad news to hit embattled tech firm BlackBerry (NYSE:BB) is that its long-time CEO John Chen has just left the company. Chen officially retired on Nov. 4. But his departing message to employees seemed to indicate that his retirement was not voluntary. In a letter to BlackBerry employees posted on the company’s website, Chen said that he was sad to be retiring “with little notice.” Chen had led the former smartphone maker for a decade and also served as executive chairman of its board.
Chen was appointed to BlackBerry in November 2013 with a mandate to transition the company from a smartphone maker into a cybersecurity software firm. Most recently Chen announced that BlackBerry would split into two companies, a cybersecurity firm, and a separate Internet of Things (IoT) business, which is planning to hold an initial public offering (IPO) in mid-2024. The company also announced earlier this year that it was exploring a range of strategic alternatives, including a potential sale.
BlackBerry most recently reported a quarterly loss of $42 million. BB stock has declined 24% in the last 12 months and is down 60% over five years. In the decade that Chen led BlackBerry, the company’s share price declined 38% and now trades as a penny stock.
Pfizer (PFE)
U.S. pharmaceutical giant Pfizer (NYSE:PFE) recently lowered its full-year guidance by $9 billion as sales of the company’s Covid-19 vaccines continue to collapse. Specifically, the company said it now expects 2023 sales of $58 billion to $61 billion, down from previous guidance of $67 billion to $70 billion. Pfizer said that it cut its full-year forecast “solely due to Covid products.” The company also slashed its full-year earnings guidance to a range of $1.45 to $1.65 per share, down from previous guidance of $3.25 to $3.45 a share.
The cut to the guidance came after Pfizer said that it now expects revenue from its Covid-19 pill Paxlovid to be about $7 billion lower than previously expected due to the return of unused doses by the American government. At the same time, the company anticipates sales of its Covid-19 vaccine, Comirnaty, to be $2 billion less that expected due to declining vaccination rates. Pfizer’s updated Covid-19 booster shot became available in September, but supply and insurance coverage problems have hampered the rollout. PFE stock is down 40% on the year.
Oracle (ORCL)
Software company Oracle’s (NYSE:ORCL) recent quarterly print was the latest in a string of disappointments. ORCL stock dropped 10% immediately after the company issued mixed financial results and provided forward guidance that was weaker than Wall Street had expected. Oracle announced EPS of $1.19 compared to $1.15 forecast on Wall Street. Revenue totaled $12.45 billion versus $12.47 billion analysts expected.
The forward guidance was worse. Oracle said that it expects $1.30 to $1.34 per share and 5% to 7% revenue growth in this year’s third quarter. Analysts had penciled in $1.33 in EPS and $13.28 billion in revenue, which implies 8% growth. The technology concern said that its latest earnings were hamstrung by its continued integration of Cerner, the electronic health records company that it acquired in June 2022 for $28.2 billion. The company’s hardware revenue declined by 6% to $714 million in Q3.
ORCL stock has fallen 15% since its latest earnings report was issued on Sept. 11 of this year. It’s a definite among blue-chip stocks to sell.
General Motors (GM)
Automaker General Motors (NYSE:GM) may have reached a tentative new labour agreement with the United Auto Workers (UAW) union, but it has come at a price. Specifically, General Motors has agreed to invest $13 billion in its American manufacturing facilities by April 2028 as part of its efforts to appease the union. Additionally, GM has agreed to 25% pay increases, bonuses, and other enhanced benefits for autoworkers, such as profit-sharing and a $5,000 ratification bonus.
The 46,000 UAW members who work at GM are expected to vote on the new contract over the next few weeks, and its approval is expected. Still, the six-week strike by the autoworkers union is expected to negatively impact GM’s operations and finances going forward. The company recently announced that it is delaying production of its electric trucks until late 2025 as it seeks to preserve capital due to the financial impacts of the strike. GM stock is down 14% this year and down nearly 20% over five years.
Rite Aid (RAD)
As a general rule, investors shouldn’t buy a stock after the company files for bankruptcy. So how did Rite Aid (OTCMKTS:RADCQ) land on this list of blue-chip stocks to sell? At times, investors try to bottom fish stocks of bankrupt companies, hoping to make a quick profit on any bounce higher in the share price. This has been evident in the recent volatile price movements seen in the defunct drugstore chain, whose shares now trade on the over-the-counter market after the company filed for bankruptcy and announced plans to close many of its stores.
The bankruptcy of the retail pharmacy chain, which has more than 2,000 locations, is the result of multiple lawsuits related to the dispensing of opioid medications. The U.S. Justice Department sued Rite Aid in March of this year, claiming the company knowingly violated the law by filling unlawful prescriptions for controlled substances and helped fuel America’s opioid epidemic in the process. Rite Aid has denied the allegations and filed for Chapter 11 bankruptcy in an effort to resolve the lawsuits.
Rite Aid’s stock has risen 31% since the start of November but is still down 54% over the past month and down 92% on the year. Playing with this stock is like playing with fire. Investors will likely get burned.
Texas Instruments (TXN)
Last on the list of blue-chip stocks to sell is Texas Instruments (NASDAQ:TXN), once a mighty tech company that has fallen on hard times. TXN stock has slumped 10% this year as the microchip maker has issued weaker-than-expected financial results that failed to meet Wall Street expectations. For this year’s third quarter, the semiconductor company reported EPS of $1.85, which was slightly better than the consensus estimate among analysts of $1.82. However, revenue in Q3 amounted to $4.53 billion, which was below expectations of $4.60 billion.
Like the aforementioned Oracle, Texas Instruments provided weak guidance, saying it expects revenue in a range of $3.93 billion to $4.27 billion, which is below the $4.50 billion that analysts had penciled in for the company. While Texas Instruments’ microchips and semiconductors can be found in products ranging from automobiles to consumer electronics, it is having trouble boosting its sales. Its chips also aren’t popular in the red hot area of artificial intelligence.
On the date of publication, Joel Baglole 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.
