Portfolio Poison: 3 Toxic Stocks to Purge Immediately

Stocks to sell

Bears have faced a challenging few years, feeling like an eternity since the 2019 flash crash had pessimists forecasting a financial downturn akin to the 2008 crisis. Similarly, the early stages of the pandemic painted a grim economic picture — until unexpected monetary policies propelled stocks to unprecedented heights, even as reasonable assessments made them clear stocks to sell immediately. The Federal Reserve’s policy shift further intensified bearish sentiment, sparking fears of recession and leading to a stock dip in 2022, though the market has since rebounded, hitting fresh all-time highs.

However, this narrative of overall market resilience doesn’t extend to individual stocks. In recent years, numerous stock scams, cases of severe overvaluation and irrational exuberance have been unveiled, culminating in the grounding of previously soaring stocks as investors prioritize financial fundamentals more than ever.

Despite their grim prospects, these faltering stocks continue to cling on. If you currently own any of these stocks, it may be time to sell them ASAP.

Vornado Realty (VNO)

Source: GaudiLab / Shutterstock

The income alone highlights the challenges facing Vornado Realty (NYSE:VNO), a commercial real estate stock. With its dividend suspended for most of 2023 due to declining income and rising rates, 2024’s prospects appear dim. In December 2023, Vornado informed investors of its plan to distribute only one dividend in the fourth quarter of 2024, a significant departure from the quarterly payments income investors typically expect. This situation places Vornado’s difficulties in stark contrast to those of Realty Income (NYSE:O), which has managed to retain its title as the “Monthly Dividend Company.”

Vornado’s year-end report is likely to unsettle even the most optimistic commercial real estate investors and make it a clear stock to sell immediately. The company reported a net loss of 32 cents per share for the fourth quarter and struggled to achieve overall profitability for the year. The apparent annual profit largely results from accounting maneuvers rather than genuine business success, with non-cash transactions such as credit losses, property impairments and deferred tax liabilities artificially inflating its bottom line.

Bark (BARK)

Source: Jonathan Weiss / Shutterstock.com

Subscription-based pet stock Bark (NYSE:BARK) became a casualty of the SPAC-mania, with its value plummeting to a mere fraction of its pre-merger peak. Investors eventually recognized the stark reality of Bark’s financials and the lack of a compelling value proposition, leading to a loss of confidence Still, some hold onto a false hope that Bark remains a winner, rather than a stock to sell immediately.

The downturn is most noticeable in Bark’s flagship BarkBox product, which thrives in an economic climate flush with household discretionary income — a condition not reflected in the current economy. This has resulted in a consistent decline in sales over recent quarters. Bark has never achieved profitability, a critical factor for investors in today’s economic environment. The allure of long-term growth prospects without a solid fundamental basis no longer appeals to investors as it might have in 2021. Consequently, Bark represents another example of a stock whose valuation surged too rapidly, only to fall just as quickly.

Peloton Interactive (PTON)

Source: JHVEPhoto / Shutterstock.com

I use and love my Peloton Interactive (NASDAQ:PTON) bike daily, but I wouldn’t touch the stock with a ten-foot pole. Following product recalls and a spike in insider stock sales, Peloton’s outlook appears dim.

The company’s latest earnings report revealed a per-share loss nearly twice what analysts had anticipated. Concurrently, Peloton saw an uptick in its churn rate (subscriber cancellations), while the influx of new customers failed to offset this loss. Management attributed this to seasonality, a valid point to some extent. However, as a luxury item aimed at consumers with disposable income, Peloton’s market is now saturated with those who desire and can afford its products, significantly narrowing the scope for acquiring new customers.

Speculation about a potential acquisition has been rampant since Peloton’s stock began its decline, and I, for one, hope these rumors materialize into a buyout sooner rather than later. The last thing I want is for my fitness equipment to turn into an expensive paperweight should Peloton cease operations and abandon its remaining subscribers.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.

Articles You May Like

Quantum Computing: The Key to Unlocking AI’s Full Potential?
Data centers powering artificial intelligence could use more electricity than entire cities
Acurx Pharmaceuticals to add up to $1 million in bitcoin for treasury reserve, following MicroStrategy’s playbook
Autonomous Vehicles: Why 2025 Will Usher in the Self-Driving Car
Activist Ananym has a list of suggestions for Henry Schein. How the firm can help improve profits