There will always be ups and downs when it comes to stocks. But sometimes, the downturn can be more severe than usual. Knowing which stocks to sell during a downturn is important to save your portfolio.
Deciding which stocks to sell can be difficult. You need to watch the general market trend as well as individual companies. If a particular stock is underperforming against the market as a whole, then it’s likely not a good investment. Finally, listen to what the experts are saying. If analysts recommend that you sell a particular stock, then it’s probably best to follow their advice.
Following these tips can help ensure your portfolio weathers the storm during a downturn.
These four stocks to sell have not been doing well so far in 2022 and therefore, they are stocks to sell if you want to avoid unnecessary risk.
Xerox (NASDAQ:XRX) is down 18% this year mainly because of the broader work-from-home trend. Xerox’s main product is photocopiers, and with more people working remotely, there is less need for copies. This has led to a drop in Xerox’s stock price and fewer sales for the company.
Xerox is not the only company affected by the work-from-home trend; other companies that make office supplies have also seen a drop in sales. However, Xerox is one of the most affected because its main product is no longer as necessary as it once was. Xerox is trying to adapt to this new trend by expanding its services. It will be interesting to see how this strategy works out.
A recent study by Mercer found that more than 75% of companies plan to adopt the hybrid work model. As a result of Covid-19, many businesses have to reevaluate their office space needs. For employees, working from home is becoming the new normal. The hybrid model offers businesses a way to accommodate these new preferences while maintaining a presence in the office.
In addition, moving away from paper and toward digital documents is one reason sales have decreased in recent years. A glance at the office supply sections of any store will show you proof enough. Combining these two factors leads to a pessimistic outlook for Xerox, which is why it is one of the best stocks to sell.
Kohl’s (NYSE:KSS), once a stalwart in the retail world, has been slowly declining in recent years as people move online for their shopping needs. The pandemic has only accelerated this trend, as people are now even less likely to go into brick-and-mortar stores. The retail apocalypse is real, and Kohl’s is one of its many victims.
The retailer’s quarterly earnings disappointed Wall Street recently, with revenues falling to $3.72 billion versus $3.89 billion in the year-ago period. Its net income came in at $14 million, or 11 cents per share, versus $14 million, or 9 cents per share, last year. Kohl’s has updated its expectations for 2022 earnings to a range of $6.45-$6.85 vs. the prior forecast of $7.00-$7.50. It also slashed its forecast for revenue and now expects growth to be flat to up 1% year over year.
With inflation rates up significantly, retailers are struggling with expenses such as wages and logistics. Indeed, businesses across America are starting to see consumers buying less than usual as they feel the effects of inflation. Kohl’s has publicly said that it expects this trend to continue.
Kohl’s is also currently under fire from activist hedge fund Macellum Advisors. The company has been targeted for change in ownership and a reshuffling of the board of directors. These developments are challenging when the business needs stability most desperately — not only financially but also organizationally speaking, with all eyes on CEO Michelle Gass as she tries to turn around one of the oldest retailers in America.
The broader market slump has hit several companies hard. Teladoc (NYSE:TDOC), the virtual healthcare company, has suffered significant damage, falling more than 60% this year. And it is not giving investors any reasons for a course correction.
Teladoc took a big hit in the second quarter, recording a goodwill impairment charge of $3 billion as part of its disappointing $19.22-per-share loss. This compares to one year ago when it had no such impairment and 86 cents per share in earnings instead. Second-quarter revenue was only 18% higher than the previous year, but adjusted EBITDA was 30% lower.
It is no surprise that Teladoc’s earnings have been dramatically revised down. The company was previously forecasting a loss of $43.50 per share. But now, it’s anticipating a net loss per share in the range of between $61 -$62.
Teladoc’s revenue growth has been slower than expected because of the current economic situation. The company has been struggling to maintain profit growth. Share prices will likely remain depressed for some time as there is no sign of an impending turnaround, with the recent market volatility only adding more fuel to this fire. Considering these factors, Teladoc Health is one of the stocks to sell since it has the potential to fall even further.
Hawaiian Electric Industries (HE)
Hawaiian Electric Industries (NYSE:HE) is the biggest energy company in Hawaii. It has numerous subsidiaries serving approximately 95% of Hawaii’s needs.
The company’s regulated subsidiaries include Hawaiian Electric Company, Maui Electric Company, and Hawaii Electric Light Company. In addition to its utility operations, Hawaiian Electric Industries also owns American Savings Bank, one of the largest financial institutions in both Hawaii and the country.
Despite its rich history, Wall Street analysts are not convinced regarding its immediate future. Panic selling has been rampant in the markets lately, but HE shares have held their value relatively well. The rally has left the stock with very little upside.
In addition, Hawaiian Electric Industries is a special company because it has 100% exposure to Hawaii. It is a double-edged sword. On the one hand, Hawaiian Electric is attractive because it has gained substantial experience concerning Hawaii’s culture and inhabitants. On the other, its lack of diversification may be a liability because of over-exposure.
According to CNN data, Hawaiian Electric has a consensus rating of “hold” based on five analysts. The average price target of $41.50 per share implies 3% downside. The stock’s performance in the year thus far has been excellent, considering the broader state of the markets. Shares are up 3% in 2022, while the S&P 500 is down 11% over the same period. Consequently, it is an expensive investment, confirming its place on this list of stocks to sell.
On the publication date, Faizan Farooque 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.