The Nasdaq index is driving the stock market to record heights, having risen 20% through the year’s first half. The index is being powered higher by a select number of mega-cap technology stocks that are outperforming such as Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT).
While the Nasdaq Composite continues to push further into record territory, not all of its component stocks are sharing in the bounty. The current rally remains heavily concentrated in only a few names, leaving many stocks trailing far behind. Some Nasdaq stocks are deep in the red on the year and sliding lower, making them bad investments.
Here are three Nasdaq stocks to sell in June before they crash and burn.
Lululemon Athletica (LULU)
Lululemon Athletica’s (NASDAQ:LULU) first-quarter financial results released in early June have done nothing to help the company’s stock. Year-to-date, LULU stock is down nearly 40%, making it one of the worst performers on the Nasdaq exchange.
While the maker of athletic apparel managed to beat Wall Street’s forecasts on the top and bottom lines, its latest print showed a continued pattern of slowing sales, pushing the stock lower.
The company announced EPS of $2.54 versus $2.38 that was expected among analysts. Revenue of $2.21 billion beat consensus expectations of $2.19 billion. Global sales were up 10% from a year earlier.
Despite the beat, Lululemon reported that its sales in North America continue to slow and offered weak forward guidance for the current second quarter. Management stressed that they expect sales to pick-up in the second half of this year. Investors appear to be taking a wait-and-see approach with LULU stock.
Copart (CPRT)
Copart’s (NASDAQ:CPRT) stock is up 14% on the year. However, all those gains came in the first quarter. Since April 1, the share price has slumped about 6% and largely been trading sideways. Earnings from the company, which runs an online auction and remarketing services for used and salvaged vehicles, haven’t set the world on fire. Copart’s Q1 print narrowly beat the consensus forecasts of Wall Street analysts.
The company reported EPS of 39 cents, which was only slightly better than estimates of 38 cents. Revenue totaled $1.13 billion, which was slightly ahead of forecasts that called for $1.11 billion in sales.
On their earnings call with analysts and investors, management at Copart sounded downbeat, saying their industry continues to face challenges with decreasing used vehicle prices and elevated repair costs.
Those challenges could cast a cloud over upcoming earnings from Copart, making this a Nasdaq stock to sell.
Starbucks (SBUX)
Some analysts are starting to talk about a recovery at Starbucks (NASDAQ:SBUX). While a turnaround might eventually take hold, investors shouldn’t bank on a big recovery in the near-term. Year-to-date, SBUX stock is down 15% and lagging behind other components of the Nasdaq.
Starbucks Q1 print was a train wreck, sending the share price down sharply. EPS of 68 cents was well short of the 79 cents that analysts had penciled in for the company. Revenue of $8.56 billion missed Wall Street targets of $9.13 billion, with global sales down 2% from a year ago. Worse, the company’s executive team said they expect things to get worse at Starbucks before they get better.
Management lowered their forecast for both 2024 earnings and revenue, saying that its stores are likely to continue underperforming for several more quarters. The gloomy guidance makes Starbucks a Nasdaq stock to sell in June.
On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
