3 Toxic Stocks to Dump Before the New Year

Stocks to sell

Black Friday is here, and the holiday season is officially upon us. For investors, it’s a good time to go bargain shopping as well. But there are some stocks out there that could spoil your fun. These three stocks to sell have all fallen significantly in recent months. But there’s no discount here. Rather these toxic stocks are going to keep destroying shareholder capital in the months and years to come. These are certainly stocks to sell.

So here are three stocks to sell you should consider dropping from your portfolio.

Gamestop (GME)

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The meme stock mania of 2021 was certainly an interesting and historic event for capital markets. But it also ended quite a while ago. The Gamestop (NYSE:GME) drama is so far in the past that a movie about it has already been made.

Some traders refuse to let go. There is still a small pocket of GME stock enthusiasts who refuse to move on, even as the short squeeze ended ages ago.

The truth is that Gamestop is a small and struggling retailer. Its business model is outdated, given the adoption of digital game distribution platforms such as Steam and Microsoft’s (NASDAQ:MSFT) Gamepass. Gamestop’s balance sheet is nothing too impressive either.

The GME stock thesis, such as at this point, revolves around improbable things. A naked short-selling ban, even though naked short-selling is already illegal. Or that the controversial CEO, Ryan Cohen, will figure out some magical solution to Gamestop’s structural business model problem.

In any case, another holiday season is upon us. Gamestop will likely deliver more poor sales results, probably shut some stores, and otherwise show the warning signs that struggling retailers typically do. Throw in a weakening economy and uneven trends in the gaming industry, and GME stock is set to disappoint heading into 2024. This makes it one of those stocks to sell.

Carvana (CVNA)

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Carvana (NYSE:CVNA) aims to reshape the used car industry. Its combination of a strong digital offering and unique car vending machines seems like it could transform the sector.

However, Carvana has struggled to turn that idea into a sustainable business. Carvana has run up truly shocking amounts of red ink in recent years.

And recent earnings did nothing to change that trend. The company reported another large loss while warning that it expects car sales to decline as the auto market loses steam. If Carvana couldn’t make money during a booming car market with record low-interest rates, it almost certainly will struggle amid the less favorable economic conditions we see today.

Plug Power (PLUG)

Is the dream finally over for Plug Power? (NASDAQ:PLUG). The struggling hydrogen power firm has been in business since the 1990s. It has not become profitable or generated much proof of a sustainable business model.

PLUG stock peaked at $1,500 per share (split-adjusted) in 2000 when hydrogen power solutions were supposedly right around the corner. Fast forward to 2023, and Plug Power has lost money each of the past ten years while showing no meaningful commercial traction for its product offerings.

That said, PLUG stock did rally from $2 to a peak of more than $60 in 2021 as traders bid up all sorts of speculative tech and green energy companies. As cheap money has dried up and investors now focus on profitability, Plug Power has lost its charge.

The financial results make it clear why. Last quarter was a disaster, with the firm generating negative gross margins, a revenue plunge, and execution problems at its hydrogen sites. The firm warned it may go out of business in the coming months if it can’t raise more money. It’s time to sell PLUG stock before they turn off the lights.

On the date of publication, Ian Bezek 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.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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