In today’s volatile market, identifying stocks to sell is critical to preserving capital invested. As economic uncertainties loom, learning which investments might falter can safeguard portfolios. Here, the focus is on three stocks that hold vulnerabilities, signaling potential downturns. Each company faces unique adversities.
To begin with, the first one contends with fluctuating international currencies impacting the top-line. Meanwhile, the second one needs help with subdued consumer spending on high-ticket items. Finally, the third one navigates turbulence stemming from strategic restructuring moves. These factors collectively highlight their susceptibility to broader economic downturns. They are making these companies prime candidates for investors considering a strategic exit.
To put it briefly, these businesses suffer from basic market dynamics flaws. Selling them can reduce risk and improve the portfolio’s performance. It is crucial to actively manage assets, investigate novel approaches, and understand why certain stocks are worth watching during economic ups and downs. Investigating these businesses’ complexities can help one make informed investing choices in today’s erratic stock market.
Nu Skin Enterprises (NUS)
Nu Skin Enterprises (NYSE:NUS) is a direct-selling company that offers a range of skincare and nutritional products. The company had a top-line of $417.3 million for Q1 2024. This was impacted negatively by foreign currency fluctuations, amounting to a 3.8% decrease or approximately $18.2 million. This indicates that a considerable portion of Nu Skin’s top-line is subject to currency exchange rates. It can fluctuate unpredictably and impact performance adversely. The negative FX impact of 3.8% on top-line highlights the vulnerability of Nu Skin’s results to international currency movements. This dependency makes forecasting complex and hinders consistent growth.
Moreover, Nu Skin has adversities in several international markets due to macroeconomic conditions, such as heavy inflationary pressures affecting consumer spending. Specific regions, like South Korea and Japan, were mentioned. Economic factors like housing market crises and unfavorable consumer sentiments have dampened growth prospects. Despite moves to manage expenses and optimize costs, Nu Skin’s gross margin decreased to 70.5% from 72.3% annually, partly due to these external economic pressures.
Overall, Nu Skin’s exposure to forex volatility and economic adversities in key markets makes it a top mark on the top stocks to sell list.
Big Lots (BIG)
Big Lots (NYSE:BIG) is a discount retailer that sells a variety of merchandise, including furniture, home decor and consumer goods. There is a considerable consumer pullback on big-ticket items. Despite moves to maintain market lead, these discretionary categories experienced a solid decline, negatively impacting sales performance. In Q1 2024, Big Lots delivered a comp sales decline of 9.9%, missing their mid-single-digit guidance. The high-ticket items like furniture and patio furniture needed to perform better, contributing to the sales miss.
Additionally, Big Lots has made strides in increasing the penetration of extreme bargains and optimizing its product assortment. This is particularly true through its five key action strategies. The heavy mix in home furnishing categories remains a drag on performance. The strategy to achieve 75% bargain penetration and increase extreme bargain penetration to 50% by year-end reflects a proactive pricing and assortment management approach. However, the disproportionate impact of slow-moving categories like furniture underscores a strategic vulnerability that limits the company’s agility in responding to changing consumer preferences.
Therefore, Big Lots is at the top of the list of stocks to sell due to declining consumer spending on high-ticket items and reliance on underperforming product categories.
Worthington Industries (WOR)
Worthington Industries (NYSE:WOR) leads in products such as steel, aluminum and specialty metals. In Q4 fiscal 2024, Worthington delivered a loss from continuing operations amounting to 64 cents, a stark contrast to the earnings of $1.01 per share delivered in Q4 2023. This downturn in profitability can largely be attributed to restructuring, impairment and one-time charges totaling $74 million. This translates to $1.38 per share. These charges primarily stem from selling a 51% stake in their Sustainable Energy Solutions segment to form a joint venture with Hexagon Composites.
Such strategic moves may also improve focus or streamline processes but they have had a significant instant impact. Furthermore, Worthington’s performance represented larger obstacles across all of its parts. Adjusted EBITDA decreased from $94 million in Q4 2023 to $63 million in Q4 2024, indicating a drop in profitability even with efforts to lessen the impact. Additionally, the yearly gross profit dropped from $94 million to $79 million. This illustrates how difficult it has been for the business to continue operating profitably despite operation changes.
In conclusion, Worthington’s position on the list of the top stocks to sell is reinforced by its challenges to profitability and the competitive pressures it faces in the metals sector.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
