In times like this, it’s best to mitigate your losses by identifying stocks to sell and get rid of the biggest losers in your portfolio.
Fortunately, the stock market’s horrendous year is almost over. Unfortunately, that’s only because the calendar is nearing the end of 2022, and not because the market is turning around any time soon.
Major indices are down between 16% and 31% for the year. Inflation continues to be at a generational high and the Federal Reserve is all but certain to hike interest rates yet again when it next meets on Nov. 2.
The 10-year Treasury yield is trading at more than 4%, which is the highest since July 2008. That’s a sure indication that the market – and investors – are still hedging their bets about a possible recession.
I used my Portfolio Grader tool to identify some of the best stocks to sell in the market right now. The Portfolio Grader is my exclusive tool assigns stocks a letter grade based on fundamentals such as sales growth and operating margin, plus quantitative factors that indicate buying pressure.
Here are seven stocks to sell right now that have “F” ratings from the Portfolio Grader. Avoid these names at all costs:
|CGC||Canopy Growth Corporation||$2.50|
Automation software company UiPath (NYSE:PATH) went public on the New York Stock Exchange in April 2021 at $56 per share. That wasn’t so long ago, but now PATH shares are less than $12 – and a turnaround doesn’t seem to be anywhere in the cards.
A few years ago, UiPath may have been more interesting. The company got its start in 2005 in Romania and offers so-called “software robots,” otherwise known as Robotic Process Automation, that purportedly help companies be more productive. The company is working in the banking, healthcare, insurance and manufacturing sectors.
But in a rising interest rate environment, growth stocks like PATH aren’t nearly as appealing as they were just a couple of years ago. Revenue in the second quarter of 2022 was nearly 24% better than a year ago, but the rate of growth has greatly slowed from last year’s growth of more than 45%, making this once of the stocks to sell and forget.
Down 78% so far in 2022, UiPath will need to turn around its sales growth if it’s going to earn a better grade from the Portfolio Grader. As for now, PATH stock has an “F” grade.
You would think that a business like Carvana (NYSE:CVNA) would be a winner rather than occupying a place on a list of stocks to sell. Particularly if you’re one of those car buyers who are eager to avoid the sales floor and haggling over price.
Instead, Carvana sells cars online and will either deliver your vehicle or allow you to pick it up at one of its locations from a giant vending machine. It’s a pretty great concept. But this isn’t a great time to own CVNA stock.
CVNA stock is down a whopping 95% so far this year thanks to the stock market’s drop and a spike in used car prices that made buying used cars much less appealing this year.
And the company isn’t profitable — consistently posting quarterly losses per share and even then not hitting analysts’ expectations. For example, in the second quarter analysts were expecting a loss per share of $1.98 – and Carvana ended up losing $2.35 per share.
Analysts don’t expect Carvana to start consistently turning a profit until 2025. With that dour forecast, it’s no wonder why the Portfolio Grader gives CVNA stock an “F” rating.
I wish I had better news for those of you who are holding Ideanomics (NASDAQ:IDEX) stock. Unfortunately, this is a company that doesn’t even have a solid identity, making it one of the stocks to sell on market weakness.
You can call it a clean energy-focused business, but it’s had its fingers in everything from elective vehicle design to building tractors, to wireless charging. It has a finance/real estate segment, called Ideanomics Capital. All in all, IDEX stock represents a company that is just unpredictable.
And nothing is less appealing for an investor than to put money into a company when you really have no idea what to expect.
In fact, about all you can expect from IDEX stock is that it will continue to fall – shares are down nearly 80% so far this year. You can expect the company to underperform. In the second quarter, Ideanomics brought in only $34.2 million in revenue – analysts were expecting much more than that, about $74.5 million.
Ideanomics says that it will continue to bring in new capital as it grows – but should investors really be along for the ride at this point? I think not. IDEX stock has an “F” rating in the Portfolio Grader.
With cable-cutting in vogue and people turning to streaming services, Roku (NASDAQ:ROKU) looked to be in the catbird’s seat for a while.
The stock performed like gangbusters in 2020 and the first half of 2021 as people were stuck indoors during the pandemic with little to do for entertainment but stream movies and TV programming.
But times have changed – and not for the better for ROKU shareholders.
Once valued at more than $400, now Roku stock is barely above $50. Second-quarter earnings of $764 million were less than analysts’ expectations of $804 million. A loss of 82 cents per share was also 11 cents more than the Street anticipated.
Roku acknowledged a slowdown in advertising spending in Q2 and said it expects that trend to continue. Its forecast for the third quarter of $700 million was much lower than analysts’ expectations for $898 million.
That’s not a formula for success. And that’s why ROKU gets an “F” rating in the Portfolio Grader.
Canopy Growth Corporation (CGC)
Hopes that Canopy Growth Corporation (NASDAQ:CGC) stock would be a big winner in 2022 have evaporated in a puff of smoke. Shares are down 70% so far this year, including a drop of 18% over the last month.
Investors had high hopes (if you pardon the pun) that CGC stock would flourish with the Democratic party in power in Washington. But Congress is more focused on midterm elections, bringing down inflation and keeping a watchful eye on Russia’s war with Ukraine to do anything with marijuana legalization.
Earnings for the company’s fiscal first quarter of 2023 – released in August – show that CGC stock has lost its momentum. Revenue of $110.12 million was less than expectations for $112.67 million. The company also reported losing 87 cents per share, which was more than 200% worse than expectations of a loss of 28 cents per share.
CGC stock continues to have an “F” rating in the Portfolio Grader.
JetBlue Airways (JBLU)
JetBlue Airways (NASDAQ:JBLU) made plenty of headlines this summer when it announced plans to buy Spirit Airlines (NYSE:SAVE) for $3.8 billion. The deal would make JetBlue the nation’s No. 5 airline by size.
The deal could be a good thing, assuming that it’s approved by federal regulators. JetBlue already has a partnership with American Airlines (NASDAQ:AAL) in the northeast, so regulators may take a close look at the JetBlue-Spirit deal before it closes in 2024.
It remains to be seen if JetBlue will overpay for Spirit. It’s committed to paying $33.50 per share for SAVE shares, but the airline was priced at less than $25 when the deal was announced.
Meanwhile, JBLU is coming off a disappointing earnings report in the second quarter, with earnings of $2.44 billion and a loss per share of 47 cents both worse than estimates of $2.46 billion in revenue and an expected loss of 11 cents per share.
JBLU stock has an “F” rating in the Portfolio Grader.
Caesars Entertainment (CZR)
Ceasars Entertainment (NASDAQ:CZR) could be considered a victim of its own success. Like other pandemic stocks, Ceasars got a big boost during the Covid-19 pandemic as well as from an increase in i-gaming.
But the gains were short-lived and Ceasars has been unable to sustain its price from those heady days. Shares are off 65% in 2022 as investors are doubting how profitable online sportsbooks will really be.
Then when you factor in rising inflation – and the decline of discretionary spending from people’s household budgets – and suddenly CZR stock looks less appealing.
Revenue growth is slowing dramatically. In the second quarter, year-over-year growth clipped along at 12.75%. But in the previous three quarters, year-over-year growth was 27.9%, 63.5% and 86.1%. That slowdown in earnings growth is a big reason why the Portfolio Grader has an “F” rating on CZR shares.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.