While the stock market has been rallying lately, not every equity is marching higher. Many stocks are continuing to slide deeper into red on the year. That is due to factors ranging from one-off problems and poor financial results to bad execution on the part of management and business cycles. Regardless of the reasons, some stocks should be avoided by investors right now or they risk doing damage to their portfolios and gains on the year. There are also signs the current market rally might be softening, providing even more reason for investors to keep a defensive posture with the stocks they own. Here is why these three names should be on your stocks-to-sell list.
Arm Holdings (ARM)
Investors who got in on the initial public offering (IPO) of British chipmaker Arm Holdings (NASDAQ:ARM) might want to get out now. The company’s share price had fallen 13% since its September IPO date and fell 7% more after the company issued its first public financial results. While Arm Holdings’ results beat Wall Street forecasts, the stock fell on weaker-than-expected revenue guidance.
For the three months ended Sept. 30, Arm reported adjusted earnings per share (EPS) of 36 cents, in line with analyst forecasts. Revenue in the quarter totaled $806 million versus $744.3 million expected. The company’s revenue was up 28% from a year earlier, and Arm noted it shipped 7.1 billion microchips during the quarter. Unfortunately, the guidance was lighter than what Wall Street was looking for from the company.
Arm said it expects EPS of 21 cents to 28 cents on sales of between $720 million and $800 million in the current fourth quarter. That was below the 27 cents per share in earnings and revenue of $730 million to $805 million analysts had penciled in for the company. ARM stock is now down more than 20% since its market debut a few months ago, making it a stock to sell.
Uber (UBER)
Ride-sharing company Uber (NYSE:UBER) continues to disappoint. The company’s latest financial results continue a string of misses for the concern. For this year’s third quarter, Uber missed Wall Street forecasts right across the board. The company announced EPS of 10 cents a share, below the 12 cents analysts had forecast. Revenue came in at $9.29 billion compared to $9.52 billion that was anticipated.
Despite missing forecasts, Uber’s revenue was up 11% from a year ago, and reported a profit in Q3 compared with a net loss of $1.2 billion in the same quarter of 2022. Looking ahead, Uber said it expects to report gross bookings between $36.5 billion and $37.5 billion for the current fourth quarter. While UBER stock has increased 97% this year, it was starting from a low base. Since the company went public in 2019, its share price is up only 20%.
Ford Motor (F)
Ford Motor (NYSE:F) is in rough shape after enduring a six-week labor disruption at its U.S. manufacturing facilities. That turmoil will likely show up in its finances. The Detroit automotive giant estimated the targeted strikes by the United Auto Workers (UAW) cost it $1.3 billion in lost production. The full impact of the strike has yet to appear on Ford’s bottom line, but it’s not expected to be pretty. Analysts are bracing for some ugly quarterly prints moving forward.
Citing the UAW strike, Ford recently pulled its forward guidance for the remainder of this year. For Q3, Ford announced EPS of 39 cents, which was below the 45 cents expected on Wall Street. Revenue during the quarter totaled $41.18 billion versus the $41.22 billion expected. Not surprisingly, Ford blamed the poor results on the union strike, saying it lost production of about 80,000 vehicles. Ford added it plans to delay about $12 billion in previously announced EV investments while it recovers.
F stock has declined 17% so far this year and is down 32% over the last 12 months.
On the date of publication, Joel Baglole 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.
