It always makes sense to take a look at your portfolio for weak stocks so sell.
Fall nights are getting a little cooler as we barrel into the fourth quarter. While portfolios still have more work to do in 2023, it’s not too late to start considering what your portfolio will look like in 2024, and how to pick out stocks to sell.
After all, there’s no use waiting until January before you do some tidying up. The fourth quarter is an ideal time to make adjustments to your holdings while we’re still in the 2023 tax year and then have a clean slate for January.
One of the biggest indicators for stocks to sell is a lack of sales growth.
Unless the company is planning to get swallowed up by a bigger competitor, the only way to turn a profit is by selling products. If your sales growth numbers are weak, your Portfolio Grader score will likely follow and you will make any comprehensive list of stocks to sell.
The Portfolio Grader ranks stocks on an “A” through “F” scale based on a series of metrics such as sales growth, earnings performance, analyst sentiment and momentum.
Here, I’ve identified several stocks to sell with poor Portfolio Grader scores, and sure enough, they all have weak sales growth.
Qualcomm (NASDAQ:QCOM) makes semiconductors, software and other products related to wireless technology.
While it would seem that any company in that market would have a head start involving artificial intelligence and generative AI, Qualcomm disproves that theory.
Instead, Qualcomm hasn’t yet been able to profit from the AI boom. While its making progress in the space, it’s going to be some time before those efforts turn into profits. Meanwhile, Qualcomm’s competitors are off to the races and getting huge jump starts with AI applications.
Then consider Qualcomm’s non-AI business, primarily chips for mobile phones. That is in a major slowdown, and Qualcomm said in August that a quick recovery is likely not going to happen.
Earnings for the company’s fiscal third quarter (ending June 25) included revenue of $8.45 billion, down 22% from a year ago. Net income of $1.8 billion was off by 51% from last year.
QCOM stock is relatively flat so far this year. It gets a “D” rating in the Portfolio Grader and has an “F” grade for sales growth.
Li-Cycle Holdings (LICY)
Li-Cycle Holdings (NYSE:LICY) recycles lithium-ion batteries, an energy source that’s getting more important .
The company has four recycling facilities in North America that can process 51,000 metric tons of batteries per year.
The company is working on expansion projects in both North America and Europe, but the problem for Li-Cycle investors is, for now, this is not a profitable company.
Revenue in the second quarter was only $5.5 million. Expenses were $46.1 million, leading to a net loss in the quarter of $35.3 million and an increase from $30.6 million a year ago.
That’s not ideal, especially for a penny stock that has a market cap of less than $600 million to start with.
LICY stock is down 25% this year because 2024 is likely to be another rough year. Li-Cycle gets a “D” rating in the Portfolio Grader and an “F” rating among growth stocks to sell.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) has a vast footprint that touches 49 states and four Canadian provinces.
NextEra is the biggest utility company in the world, with a market capitalization of $115 billion.
But bigger doesn’t mean better, which is what makes this one of the growth stocks to sell.
NEE stock has been down big in the last few days, including an 18% drop on Sept. 28, after its subsidiary, NextEra Energy Partners (NYSE:NEP) lowered its expected distribution per unit by roughly half.
They attributed the cut to tighter monetary policies from the Federal Reserve. It now says the rate will be from 5% to 8% through 2026. Analysts responded with reduced price targets.
With this week’s losses, NEE stock is down 31% this year. It gets a “D” rating in the Portfolio Grader and an “F” rating for sales growth.
But unfortunately for investors, Nio is trending in the wrong direction. Instead of growing, Nio is delivering fewer cars. It delivered 19,329 vehicles in August, down from 20,462 in July.
Q2 deliveries of 23,520 were down from the first quarter (31,041) and Q4 of 2022 (40,052).
Nio’s earnings in the second quarter showed a drop of 17.8% from a year ago. The company also accelerated its losses, dropping 51 cents per share versus 25 cents per share a year ago.
Nio resorted to announcing a sale of $1 billion in convertible notes to shore up its balance sheet and retire some debt. But that just pushes the problem down the road.
Nio needs to sell more cars if it’s really going to become a growth story again. For now, it gets a “D” rating in the Portfolio Grader and an “F” grade for sales growth.
Enbridge (NYSE:ENB) is a Canadian pipeline and energy company that transports oil, natural gas and natural gas liquids throughout Canada and the United States.
The company transports about 30% of all crude oil produced in North America and transports about 20% of natural gas used in the United States.
Enbridge hopes that natural gas will be a major player in the U.S. for the foreseeable future – a bet considering that the White House is pushing for greener alternatives and the larger global community is focused on lowering the carbon footprint.
It also hopes the acquisition will help the company’s growth. Revenue in the second quarter was down 21% to $10.43 billion, missing analysts’ expectations for $11.75 billion.
ENB stock is down 14% in 2023. It gets a “D” rating in the Portfolio Grader but an “F” grade for sales growth.
Express (NYSE:EXPR) is a fashion retailer that caters primarily to young women and men. Its brands include Express, UpWest and Bonobos, the latter of which was purchased from Walmart (NYSE:WMT) in May for $75 million.
The company maintains about 600 retail outlets, with 530 of them under the Express brand.
The stock price is just over $8 per share, but don’t let that fool you. Express executed a 1-for-20 reverse stock split on Aug. 31 to regain compliance with New York Stock Exchange listing standards. The stock price is down 60% this year.
Earnings in the second quarter were $434.3 million, down 6% from a year ago. Express announced that it would lay off 150 workers to reduce expenses, and is planning to cut $200 million in annual expenses by 2025.
EXPR gets “D” ratings for sales growth and overall in the Portfolio Grader.
Grom Social Enterprises (GROM)
Grom Social Enterprises (NASDAQ:GROM) is another company that is using the reverse stock split ploy to remain compliant with its index.
The 1-for-20 split was executed in early September.
Investors, of course, see through such ploys, and the stock dropped even quicker when the split took place, losing more than 50% of its value. The stock is now less than $1.50, and at the rate that it’s dropping, Grom will have to do another reverse split soon.
Grom is a social media, entertainment and technology company that caters to kids and families. It provides “safe” media for kids under 13, and hosts chat features that the company monitors for user safety.
But considering the growth of TikTok and other such platforms, Grom isn’t really taking hold. Revenue for the second quarter was only $956,000, down 16% from a year ago. The company also posted a net loss of $2.21 million for the quarter.
GROM stock gets “F” ratings for sales growth and overall in the Portfolio Grader.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.