The US economy seems to be heading for a soft landing, with a slowdown in job growth indicating reduced inflationary pressure. Investors are optimistic that the Federal Reserve won’t need to raise interest rates further and might even cut rates sooner. This backdrop has led to the emergence of these stocks to sell before 2024.
Strong government employment and a positive labor supply and demand rebalancing support this outlook. Additionally, increased labor force participation, rising productivity, and declining unit labor costs suggest a soft landing scenario where inflation decreases while the economy grows.
Because the economy is strengthening, companies will face the music in 2024, and prices will either skyrocket or plummet. Now is the time to get rid of these stocks to sell.
American Airlines (AAL)
American Airlines (NASDAQ:AAL) is one of America’s largest airlines, offering thousands of domestic and international flights to almost 350 destinations in 48 countries. Although the airline industry, in general, is suffering due to numerous issues like safety and rising fuel prices, AAL is a stock investors should sell.
Last month, American Airlines announced its 2023 third-quarter financial results. There was a net loss of $545 million, or $0.83 per diluted share. As a result, the company announced that it is cutting its full-year earnings to between $2.25 and $0.25 per share, a stark difference from a previous forecast from July that saw $3.00 to $3.75 per share.
High fuel prices and weak demand in the supply chain crisis are causing losses. Yet, on the other hand, its main competitors, Delta Air Lines (NYSE:DAL), and United Airlines (NASDAQ:UAL), have reported upbeat third-quarter results. Delta Air Lines revealed an earnings growth of over 30% YoY with a net income of $1.11 billion. In comparison, United Airlines announced a 12.5% YoY for their revenue (in particular due to record-breaking performances in Asia and Europe) with a net income of $1.14 billion. In addition, going into next year, American Airlines’ consensus EPS is estimated to be in the negatives with a YoY growth of -2.45%.
AAL stock has been in a downward trend in the past six months, decreasing by almost 18.18%, and its current financials are questionable. It is certainly a gamble, and its earnings may continue to decline if the company cannot keep up with its top competitors and the rise of low-cost carriers. As a result, this stock is very compelling to sell before 2024. All in all, it’s one of those stocks to sell.
Avangrid (AGR)
Avangrid (NYSE:AGR) is an American corporation focused on transitioning the world to predominantly using clean energy resources and green technology. With a valuation of $31.39, AGR declined 27.24% YTD. However, recent decisions and competitor success have given Avangrid various risks, leading to AGR being a stock to sell.
In 2022, the clean energy market had a sizeable impact, bringing in $970 billion in revenue. Further, that figure is expected to jump until 2030, when revenue will reach $2.2 trillion, marking an 8-year CAGR of 8.50%.
Financially, Avangrid had a mediocre quarter, reporting YoY losses in key sectors. Although Avangrid brought in $1.97 billion in revenue for Q3 2023, EPS and net income tanked in reports. Diluted EPS landed at $0.15, declining 44.44% YoY, and failed to reach consensus earnings estimates by 29.06%. Further, net income collapsed, with $59 million reported or a 43.81% decline YoY.
The most significant risk that will continue to tank AGR’s valuation further has been the recent cancellation of Avangrid’s Park City Wind Contract with the State of Connecticut, resulting in heavy fines and losses in revenue. Avangrid announced the cancelation to result from supply chain shortages, though financial challenges were also a contributing factor to the decision. Ultimately, this project was set to be a massive revenue generator for AGR but resulted in a loss in profit, and future projects are now uncertain due to AGR’s unreliability.
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) is an American EV infrastructure firm that declined over 94% from its peak to $2.50 per share. Although recent news about ChargePoint rolling out Tesla-compatible charging stations has stirred optimism among analysts, evolving EV market trends and contracting margins raise concerns about the company’s future.
The competitive landscape in the EV charging market sees ChargePoint as a dominant player with over 70% market share, competing against players like EVGo (NASDAQ:EVGO) and Electrify America. However, Tesla’s partnerships with major automakers and the growing number of new charging stations could threaten ChargePoint’s market position.
ChargePoint’s prospects are closely tied to the health of the EV industry, and recent signs of a potential slowdown in EV demand are concerning. Major automakers, including GM (NYSE:GM) and Tesla (NASDAQ:TSLA), have expressed worries about high-interest rates impacting EV affordability, which could negatively affect ChargePoint’s future earnings.
Financially, ChargePoint faces challenges with shrinking margins and increasing costs, evident in the company’s 10-Q filings. The drop in gross margin over the past quarter further indicates the squeeze on EV demand in the market. All in all, CHPT is one of those stocks to sell.
CHPT’s future appears uncertain, given the challenges posed by market competition, a potential EV demand slowdown, and financial struggles. Investors should exercise caution when considering their positions in the company as it navigates these obstacles.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
