3 stocks to sell ASAP before they implode
As we look to next year, we need to think about which stocks to sell and which opportunities to seize. This year has been all about de-risking portfolios, and that trend will likely continue for the foreseeable future.
Stocks have been under pressure for several months now, and the trend isn’t fading anytime soon. The Federal Reserve has raised interest rates aggressively, putting immense pressure on growth stocks, which still trade at relatively high valuations. If interest rates continue to rise, these stocks will likely see even more compression.
In addition, economic growth is slowing down. If there is a recession, the market will only get worse. However, some stocks are more likely than others to falter in the painful downturn. Let’s look at three such stocks that you should probably eliminate from your portfolios.
blue apron (APRN)
This increase in demand for online groceries has been a boon to companies such as blue apron (NYSE:APRN), which delivers meal kits right to your door. Founded in 2012, Blue Apron was one of the first companies to enter the meal kit delivery space. In 2017, the company held a market share of 40%, which is only 9% at present.
Given the unfavorable market conditions, the company faced increasing cost pressures, resulting in mounting losses. Additionally, its liquidity issues point to more shareholder dilution ahead.
The path to profitability is a major concern for the company. The combination of rising costs, growing competition, and inflation-pressured customers made the goal of breaking even elusive. Therefore, it is one of the stocks to sell before it loses more value over the next few quarters.
Tech giant Metaplatforms (NASDAQ:META) has seen remarkable volatility this year, much like its peers. Its dismal performance in the stock market this year can largely be attributed to inflation and the Fed’s response. Its business is highly dependent on advertising revenue. As interest rates rise and the economy slows, businesses are less likely to advertise, which has a direct impact on the top and bottom lines of businesses that depend on ad revenue.
Most of his problems, however, are self-inflicted. Its metaverse experiment as part of its Reality Labs segment has not been successful so far, burning through its cash reserves at a rapid pace. The slice is lose billions every quarter, and while that may seem paltry for a company like Meta, it adds up considerably. Even if the plan comes to fruition, it will be many years before it has an impact on the company’s sales. Meanwhile, META stock will continue to lose more value for the foreseeable future.
Tilray (NASDAQ:TLRY) is one of Canada’s leading licensed producers and the world’s largest cannabis company. He did well to grow his business inorganically through his major acquisitions and investments in Aphria and Hexo. However, its acquisitions did not bear much fruit, with its results in the medical and adult markets declining from the prior year period. Plus, it has limited access to the US marijuana market, making it an unattractive legalization game in the US.
Quantitative tightening has wreaked havoc on Tilray and other speculative growth stocks. However, companies in the cannabis sector haven’t learned how to make money efficiently, and Tilray is no different, with its stock taking a hammer blow. Even if interest rates were to return to 2021 levels overnight, that shouldn’t be enough to save Tilray. Its recent results show that it is not growing fast enough to justify its share price. Thus, this is one of the stocks to sell.