Urgent Sell Alert: 3 Stocks to Dump Before the Next Market Dip


  • All stocks show considerable revenue declines, highlighting struggles with customer retention and market competition.
  • GameStop (GME): Its net sales plummeted, highlighting a considerable revenue decline and ongoing profitability challenges despite cost-cutting measures.
  • Williams-Sonoma (WSM): Experienced a considerable drop in comparable brand revenue, continuing a multi-year trend of declining sales across key brands.
  • Big Lots (BIG): Reported a solid drop in comp sales, significantly missing expectations, reflecting poor sales forecasting and struggles to attract customers.
Stocks to Sell - Urgent Sell Alert: 3 Stocks to Dump Before the Next Market Dip

Source: teh_z1b / Shutterstock.com

Making wise decisions is essential to protecting your money in the very volatile stock market, like the ongoing high interest and inflationary macro environment. This is a critical analysis of three prominent stocks. These firms are now in trouble and might put the stability of your portfolio at risk. These businesses’ serious operational and financial losses are all too apparent from their sharp drops in revenue and persistent performance problems. Despite their attempts to cut expenses, declining revenues and ongoing profitability issues still plague these businesses. Thus, identifying these stocks to sell is crucial for safeguarding capital in uncertain markets.

Moreover, they deal with a multi-year pattern of dropping sales for major brands, which indicates enduring consumer engagement problems. Similarly, it is difficult to reach sales goals when there are gaps in the market strategy and customer attractiveness. To protect their capital from market declines, investors must understand the underlying issues these stocks are facing. By recognizing and selling weak stocks in advance, they can avoid future investing losses as economic risks loom.

GameStop (GME)

GameStop (GME) sign on side of building in blue early morning light
Source: shutterstock.com/EchoVisuals

GameStop (NYSE:GME) leads in retail consumer electronics and video games. The company derived net sales of $0.882 billion during Q1 2024, a solid drop from $1.237 billion for Q1 2023. This $355 million drop, or around 28.7%, is a severe top-line decline. Certainly, declining sales are a serious worry since they might signify fundamental issues. These are failure to retain consumers, deriving value, drop in market share, or progressively competing in the sector.

Further, selling, general, and administrative (SG&A) costs decreased from $345.7 million in Q1 2023 to $295.1 million in Q1 2024. However, SG&A costs uplifted from 27.9% to 33.5% of the top line. , the SG&A ratio has increased, indicating cost structure inefficiencies deriving in top-line. Following this, GameStop continues to be unprofitable. Its net loss decreased from $50.5 million in Q1 2023 to $32.3 million in Q1 2024. Even if the company’s loss position has improved, net losses continue to prevail.

Overall, the transition to digital downloads and online sales has presented GameStop with several difficulties, which may justify its listing on the stocks to sell list. 

Williams-Sonoma (WSM)

Williams-Sonoma (WSM) store in a shopping mall
Source: designs by Jack / Shutterstock.com

Williams-Sonoma (NYSE:WSM) sells upscale cookware and home accessories. Maintaining customer engagement and sales momentum across its brands is a fundamental problem, as seen by the persistent reduction in comparable brand revenue over several years. In Q1 2024, the firm reported a 4.9% fall in comparable brand revenue. This comes after a 10.9% two-year loss in similar brand revenue and a 1.4% three-year decline in comparable brand revenue. Further, in Q1, Pottery Barn — a crucial brand in the Williams-Sonoma portfolio — saw a vital decline in comparable brand revenue of 10.8%.

Moreover, in Q1, several major brands saw negative comparable brand revenues, including West Elm (-4.1%) and Pottery Barn (-10.8%). Despite modest improvement from quarter to quarter, the general downward tendency remains. In contrast, positive comps were recorded by Williams-Sonoma and Pottery Barn Kids, showing uneven performance throughout the portfolio. The fall in popularity of staple brands like West Elm and Pottery Barn highlights a serious problem with preserving these companies’ allure and relevancy. 

In short, Williams-Sonoma’s revenue decreases have been considerable in the face of economic uncertainty, which has raised worries and elevated the stock to a sell position.

Big Lots (BIG)

Photo of a Big Lots (BIG) store shot from the parking lot with a shopping cart in the foreground and clear blue sky in the background. BIG stock
Source: Jonathan Weiss / Shutterstock.com

Big Lots (NYSE:BIG) is a discount retailer offering a wide product range. Comparable sales trends for big lots in Q1 2024 were down 9.9%, much below the projection of mid-single-digit declines. This considerable drop in sales points to a serious flaw in the business’s capacity to hit sales goals. The actual result was far worse than the company’s anticipated mid-single-digit decrease. This indicates poor sales forecasting and misjudgment on the part of the market.

Additionally, the overall consumer climate had a detrimental effect on the company’s success. There is a reduction in consumer spending, particularly on expensive discretionary products. At the macro level, there is a drop in consumer confidence due to interest rate increases, and inflation and unemployment are major problems. Even though 70% of Big Lots locations have positive 4-wall adjusted EBITDA, some are underperforming. Since a sizable percentage of stores are underperforming, drastic measures are required to resolve these problems. 

With all that, Big Lots has faced considerable challenges in maintaining an edge. These issues have raised concerns about its performance going forward, and these fundamental downsides make it a top mark on the stocks to sell list.

On the date of publication, Yiannis Zourmpanos 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.

Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/urgent-sell-alert-3-stocks-to-dump-before-the-next-market-dip/.

©2024 InvestorPlace Media, LLC