Suddenly we’re headed for a recession. Or so it seems on Wall Street. Weak jobs and manufacturing data raised fears that the economy is slowing more rapidly than expected. This has led to an acceleration of the stock market selloff that began in July, with the technology-laden Nasdaq Composite index officially entering a correction, defined as a 10% decline from recent highs. In light of this, I’d encourage investors to analyze the S&P 500 stocks to sell to mitigate risks.
While many stocks have been dragged lower by the current selloff, some are faring worse than others. Poor second-quarter financial results have also contributed to a downward spiral for many stocks. While investors might be tempted to buy-the-dip in some stocks, that move might be premature with many analysts warning that the current drawdown in equities is likely to get worse in coming weeks.
Here are three S&P 500 stocks to sell before you regret it.
Chevron (CVX)
While oil major Chevron’s (NYSE:CVX) Q2 print was mixed, it was largely a disappointment. Unfortunately, the company is struggling to manage lower refining margins, and Chevron reported EPS of $2.55, which missed Wall Street forecasts of $2.93. However, revenue in the quarter of $51.18 billion did manage to beat the consensus expectation of $50.80 billion. Sales were up 5% YOY.
Chevron’s production segment posted a profit of $2.16 billion, a 31% increase from $1.64 billion a year earlier. However, that growth was largely offset by profits for international production that declined 30% to $2.30 billion on lower sales and natural gas prices. The real drag on the results was Chevron’s refining business, which recorded a profit of $280 million, a 74% YOY decline. International refining profits dropped 25%.
The company is also struggling with its $53 billion acquisition of Hess (NYSE:HES). The deal has run into regulatory and legal issues and is unlikely to close before mid-2025. Chevron also said that it is moving its corporate headquarters from San Ramon, California to Houston, Texas to be closer to the center of the U.S. energy sector.
CVX stock is down 7% in the last 12 months. I’d consider CVX one of the S&P 500 stocks to sell.
Amazon (AMZN)
What’s going on at Amazon (NASDAQ:AMZN)? The e-commerce giant’s stock fell 9% after it reported second-quarter sales figures that missed Wall Street targets and provided weak forward guidance. Amazon announced EPS of $1.26, which exceeded the consensus forecast of $1.03 that was forecast among analysts. However, revenue of $147.98 billion fell short of the $148.56 billion that was estimated on Wall Street.
Perhaps worse than the Q2 revenue miss was Amazon’s guidance, which calls for revenue in the current third quarter of $154 billion to $158.5 billion, representing YOY growth of 8% to 11%. The mid-point of that guidance range is $156.25 billion, which is below the average analyst estimate of $158.24 billion. In a bizarre twist, management blamed the revenue miss and weak guidance on world events such as the Summer Olympics, which they said distracted consumers and made forecasting difficult.
Amazon Web Services, the company’s cloud computing unit, posted revenue of $26.30 billion, which was ahead of $26 billion estimated by analysts. However, advertising across the company’s various products and services totaled $12.80 billion, which was below the $13 billion expected. AMZN stock is up 30% over the past 12 months.
Starbucks (SBUX)
Retail coffee chain Starbucks (NASDAQ:SBUX) Q2 financial results were not as bad as feared. But that’s not saying much. The company reported EPS of 93 cents, which matched consensus expectations. Revenue of $9.11 billion fell short of the $9.24 billion that had been forecast on Wall Street. Sales were down 1% from a year earlier. Worse, Starbucks said that its same-store sales fell 3%, driven by a 5% decline in transactions at its coffee shops. Foot traffic at the company’s U.S. stores fell 6%.
Outside of North America, same-store sales dropped 7%. In China, Starbucks’ second biggest market, same-store sales plunged 14% as both average ticket and transactions shrank. The poor results were blamed on weak consumer demand and organized boycotts in some international markets. Starbucks is in the process of trying to win back consumers with price discounts and new drinks. Executives have acknowledged that price increases have alienated customers.
It remains to be seen if Starbucks’ turnaround strategy will work. In the meantime, SBUX stock is down 26% in the last 12 months and one of the worst performers in the benchmark S&P 500 index this year.
On the date of publication, Joel Baglole 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
