The stock market is ending 2023 with outsized gains. Investors are in a cheerful mood, and many speculative stocks to take profits on are soaring right now.
But don’t get stuck with a lump of coal this holiday season. It’s time to move on from these three stocks to sell before the gains dissipate.
Soleno Therapeutics (SLNO)
Soleno Therapeutics (NASDAQ:SLNO) is a biotech firm attempting to commercialize DCCR, an extended-release tablet designed to treat Prader-Willi syndrome (PWS).
Shares rocketed 420% higher earlier this year on positive trial data. SLNO stock has continued to climb since then; in fact, the stock is up more than 3,000% over the past 12 months. This might be an excessive move, given that the company has no revenues and drug discovery is a challenging business.
Also, of note, there have been significant insider sales of SLNO stock over the past couple of weeks. It might be a good idea to follow that lead.
Chanson (CHSN)
Chanson (NASDAQ:CHSN) is a Chinese bakery chain that offers goods such as cakes, bread, sweets and beverages.
The firm came public with a small IPO in March 2023. Shares initially didn’t find much demand, as the stock traded around the $2 mark for much of the year. Since late November, however, the stock has blasted off from $2 to $11 today.
There isn’t any reported news about Chanson that would explain the dramatic move in recent weeks. The company’s revenues remain small, around $13 million annually, and there is not much growth or other reasons for the sudden optimism.
Finally, I’d note that several other small-cap Chinese stocks, such as Golden Heaven Group (NASDAQ:GDHG), skyrocketed and then plunged in recent weeks. Chanson shares could easily tumble as well.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU)
The BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (NYSEARCA:FNGU) is a niche exchange-traded note (ETN) that owns tech stocks with leverage.
Specifically, FNGU has large positions in leading momentum tech stocks such as Nvidia (NASDAQ:NVDA), Tesla (NASDAQ:TSLA), and Advanced Micro Devices (NASDAQ:AMD). Apply three times leverage to tech stocks that are already going up, and it can lead to tremendous gains. FNGU stock is up more than 400% year-to-date.
However, this leverage comes with risk. Levered ETFs tend to decay and lose value in choppy markets compared to the underlying index. Over time, most levered ETFs have generally downward-trending prices due to this factor.
And because tech stocks are quite volatile, adding 3x leverage can lead to massive swings. FNGU, for example, fell as much as 90% between its 2021 peak and subsequent trough. If tech stocks cool off, FNGU shares would be set for large losses in 2024.
On the date of publication, Ian Bezek 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.
