Now is the right time to reconsider these retirement stocks to sell. Even if you are early in your investment journey, selling shares of these companies now can be a prudent option. The expected growth rate for the earnings of these firms is questionable, and I anticipate their valuations may struggle in the coming years and decades.
The retirement stocks to sell discussed in this article are facing significant challenges, including declining business models, weakening competitive moats and uncertain outlooks. Holding onto these companies in your retirement fund could drag down earnings in your later years, leaving you in a weaker financial position.
There are many great companies and ETFs to buy out there, which could lead to a significant opportunity cost if investors continue to hold onto these retirement wreckers. With that being said, here are three companies to ditch before they tank one’s portfolio.
Ascent Solar Technologies (ASTI)
Ascent Solar Technologies (NASDAQ:ASTI) has lost a significant portion of its value since the start of the year. The company has a weak balance sheet and extremely poor financial metrics, including a negative Altman Z-Score (a bankruptcy heuristic) and revenue growth rate.
As of the first quarter of 2024, Ascent Solar reported a net loss of $2.54 million, with an earnings per share (EPS) of -$0.53. Despite this, the company managed to reduce its debt and announced plans for a public offering to raise additional capital.
The company has also struggled with maintaining compliance with Nasdaq’s listing requirements, receiving several non-compliance notices throughout the past year.
Although ASTI has partnerships on the horizon to help improve its fundamentals, I don’t think it will be enough to rescue it from its fundamentals, which makes it one of those stocks to ditch from investors’ portfolios.
Fisker (FSR)
Fisker (OTCMKTS:FSR), an EV startup, has struggled with production and demand issues. The company also resorted to shareholder dilution to shore up its balance sheet, making it a risky investment.
Fisker has struggled with production and demand issues. In Q4 2023, the company reported a gross margin of -35% and a net loss per share of $1.23. For the full year 2023, Fisker’s net loss was $2.22 per share.
Also, Fisker had $324.5 million in 0% senior secured convertible notes due in 2025. To address this, the company converted $185.5 million of this debt into 159.06 million shares of FSR stock.
There is severe bankruptcy risk with FSR, with its stock price decreasing 99.13% over the past 52 weeks. Buying into this company in expectation of a miracle or holding on may be too risky, as there could be a reasonable expectation that it will go to zero.
Energy Focus (EFOI)
Energy Focus (NASDAQ:EFOI) has seen a dramatic decline in value over the past year. Despite some gains in market value year-to-date, the company’s financials are weak.
For Q1 2024, Energy Focus reported a revenue of $833,000 and an earnings per share (EPS) of -$0.09. The company has been struggling with diminishing returns and weak revenue growth.
To address its financial challenges, Energy Focus has been focusing on securing new funding and improving its product offerings. The company received $150,000 in funding earlier this year and has been introducing updated LED lighting solutions to the market.
Furthermore, EFOI has been severely diluting shareholders, with shares outstanding skyrocketing 91% year-over-year. That practically wiped out investors’ original investment into the firm, which should be enough cause for concern to eliminate it from one’s portfolio, or at least pivot to a less diluting investment.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
