7 F-Rated Blue-Chip Stocks That’ll Have You Seeing Red

Stocks to sell

I’ve long been a proponent of blue-chip stocks as reliable anchors in an investment portfolio. But you can’t buy them blindly. While there are outstanding blue-chip stocks out there, there’s the other side of the coin – F-rated blue-chip stocks that will do serious damage unless you properly identify them as stocks to sell.

Blue-chip stocks represent names you already know – some of the most well-established and financially sound companies on the market. Blue chips are recognized leaders in their fields, sport large market capitalizations and usually offer enticing dividend payments.

Using the Portfolio Grader, you can quickly identify which blue-chip names are underperforming the market. And you can even find some names doing so badly with earnings, revenue growth, momentum and analyst sentiment that they get a dreaded “F” rating.

If you own an F-rated blue-chip stock, you are leaving money on the table that could be better utilized in more promising opportunities. Holding on comes with a lot of risk because a turnaround is not guaranteed, and if it comes at all, it could take a long time. Your money is better spent with highly rated stocks that will help you along your investing journey.

These are some F-rated stocks to sell now. It’s not too late to divest from these underperforming blue chips and move your money to more promising opportunities.

United Parcel Service (UPS)

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United Parcel Service (NYSE:UPS) is one of the biggest shipping companies in the world, operating in over 220 countries and territories. Founded more than 100 years ago, in 1907, it offers transportation, distribution, trade and brokerage services.

But time has not been kind to UPS, particularly recently. The company is battling declining delivery volume and higher labor costs, thanks in part to a new contract it signed with union workers last year.

Those factors helped lead to a sagging stock price and a disappointing earnings report in the first quarter. Revenue of $21.7 billion was down from $22.9 billion a year ago.

There were problems in both the U.S. and the company’s international segment. In the U.S., profits fell to $839 million, from $1.48 billion in the first quarter of 2023. Revenue in the U.S. fell by 5%, and the average daily volume fell by 3.2%.

In the company’s international segment, revenue fell by 6.3% and the average daily volume was down by 5.8%. Operating profit for the international segment dropped from $806 million a year ago to $682 million in the first quarter of 2024.

Warren Buffett sold his $10 million stake in UPS late last year and that looks to be a good decision. UPS is down 13% this year and gets an “F” rating in the Portfolio Grader.

Walgreens Boots Alliance (WBA)

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Walgreens Boots Alliance (NASDAQ:WBA) is a retail pharmacy chain that operates over 8,000 locations in the U.S. and over 3,000 in Europe and Latin America.

But the company is in deep trouble as spiraling costs and reduced margins – particularly with generic drugs whose prices are strongly influenced by pharmacy benefits managers – have taken a massive toll on WBA profits.

″We assumed … in the second half that the consumer would get somewhat stronger” but “that is not the case,” Walgreens CEO Tim Wentworth said in an interview with CNBC. “[T]he consumer is absolutely stunned by the absolute prices of things, and the fact that some of them may not be inflating doesn’t actually change their resistance to the current pricing. So we’ve had to get really keen, particularly in discretionary things.” 

The company cut its earnings guidance for the rest of the fiscal year from a range of $3.20 to $3.35 to a range of $2.80 to $2.95. It said it would close underperforming stores, although management didn’t say how many that would include. Wentworth told analysts that 100% of the company’s profitability comes from 75% of the company’s stores.

WBA stock is down 53% this year, including a massive 22% drop when the company dropped its full-year guidance. The stock gets an “F” rating in the Portfolio Grader.

Warner Bros. Discovery (WBD)

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Warner Bros. Discovery (NASDAQ:WBD) is a media an entertainment company formed by Warner Bros.’ spinoff from AT&T (NYSE:T) in 2022 and its merger with Discovery.

The company has several massive properties, including the Warner Bros. film studios, Cable News Network CNN, the Cartoon Network, cable station TBS, and the streaming platform Max.

But the spinoff hasn’t been a success, having lost 70% of its value since launch. And that continued this year, as revenues in the first quarter were down 7% from a year ago to $9.95 billion. The company reported a net loss for the quarter of $966 million.

The good news is that the company could repay $1.1 billion in debt in the first quarter. But I don’t expect this company to turn around until it can figure out a way to pay the rest of its debt and start putting more money into growing the business again.

WBD stock is down 35% this year and gets an “F” rating in the Portfolio Grader.

American Airlines (AAL)

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American Airlines (NASDAQ:AAL) is one of the biggest airlines in the world, operating nearly 6,700 flights per day to more than 300 destinations.

But there’s trouble in the air for AAL stock. While this summer is expected to be a big travel season, American Airlines lowered its guidance on May 28, saying it expects second quarter adjusted earnings to be in a range from $1 to $1.15 per share, down from a range of $1.15 and $1.45 per share.

In addition, the company said its total revenue per available seat mile will drop by 5% to 6%, instead of the 1% to 2% that the company first forecast.

All this comes as the airline announced the departure of Chief Commercial Officer Vasu Raja, who launched an initiative he called “modern retailing” to encourage customers to book flights on the company website or app rather than using booking sites and travel agents. But the move backfired.

Now American Airlines is left to pick up the pieces. It will take some time to dig out from this self-inflicted wound.

AAL stock is down 17% this year and gets an “F” rating in the Portfolio Grader.

Teladoc Health (TDOC)

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Teladoc Health (NYSE:TDOC) is a telemedicine and virtual health care company, offering primary care, mental health, nutrition care and more.

The company’s doctors are available for consultations 24 hours a day, seven days a week, and can diagnose cold symptoms, skin rashes, and upper respiratory infections.

That may have sounded like a good idea during the Covid-19 pandemic, but Teladoc isn’t showing the profitability that you would expect from a company this mature. While revenue was up by 3% in the first quarter to $646.1 million, the company still posted a net loss of $81.9 million and a loss of 49 cents per share.

Things won’t improve in Q2, as the company issued guidance calling for revenue in the range of $635 million to $660 million and a net loss of 35 cents to 45 cents per share.

The company’s weak stock performance prompted the ouster of longtime CEO Jason Gorevic, who was replaced by Chuck Divita, who was executive vice president of Guidewell.

Perhaps Divita will have better luck making Teladoc profitable, but there’s no need for investors to wait around as long as the company continues to issue guidance for losses.

TDOC stock is down 53% this year and gets an “F” rating in the Portfolio Grader.

Ceasars Entertainment (CZR)

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Ceasars Entertainment (NASDAQ:CZR) is a place for fun – the company offers hotels, upscale dining, dazzling shows and casino gaming.

The company has a major presence in Las Vegas has numerous gaming brands including Ceasars Palace, Harrah’s, Horseshoe, Eldorado and Tropicana.

Ceasars now has more than 50 properties, having opened its first property in Nebraska last month, a Harrah’s branded horse racetrack and casino.

While it might be fun to visit a Ceasar property, however, holding Ceasars stock has been more of a gamble. The company saw revenue of $2.7 billion in the first quarter, down from $2.8 billion a year ago. Revenue from Las Vegas properties was down 4.5% for the quarter, and income from Las Vegas was down 30%.

The Las Vegas results were particularly surprising considering the quarter included what may be the biggest party of the year in Super Bowl LVIII, which was held in Las Vegas in February. But not even the so-called big game could keep Ceasars from slipping.

CZR stock is down 17% this year and gets an “F” rating in the Portfolio Grader.

Cracker Barrel Old Country Store (CBRL)

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Cracker Barrel Old Country Store (NASDAQ:CBRL) is a chain of restaurants and gift stores.

The company operates 600 locations in 44 states, with its restaurants featuring a menu of southern comfort food and the gift shops selling everything from rocking chairs and quilts.

But customers aren’t visiting as much as they used to – be it from increased competition to changing consumer tastes, the traffic is down.

Revenue in the third quarter of fiscal 2024 included revenue of $817.1 million, down 1.9% from a year ago. Comparable restaurant sales were down 1.5%, and retail sales were down 3.8%.

Overall, the company reported a net loss of $9.2 million for the quarter, or 41 cents per share.

When you operate in a niche like Cracker Barrel, it will be hard to make a shift to attract new customers without completely changing the brand. It makes more sense to sell the stock than to hope for a turnaround.

CBRL stock is down 45% this year and gets an “F” rating in the Portfolio Grader.

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.

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