Most of the time, deeming a stock a “sell” isn’t a forever goodbye — it’s more like “see ya later” when the stock price or business prospects are more compelling. There are some cases, though, where a company earns a spot on a list of stocks to sell because it’s became a hopeless case.
[ad#Google Adsense 336×280-IA]Either the market has forever changed in such a way as to render a company obsolete (a la dial-up modems, camera film and movie rental stores), or the organization has obliterated any and all trust consumers, customers and investors may have had in it — think Yahoo’s unreported data breach or Chipotle’s (NYSE:CMG) E. coli debacle.
Fortunately, incidents in the latter category are few and far between.
Companies that mostly outlive their usefulness and marketability, however, is a recurring theme.
Here’s a closer look at ten stocks to sell that you may just want to take out of your portfolio and off your watchlist until the end of time.
Stocks to Sell: Twilio Inc (TWLO)
Nobody was arguing Twilio Inc (NYSE:TWLO) was worthy of any value-oriented awards.
TWLO stock trades at nine times its trailing revenue and is priced at a forward-looking P/E of 1491!
The long-term growth potential of this cloud-based telecom service provider, however, was enough to keep some speculators on the hook, and in TWLO stock.
That bubble may have just been popped now that Amazon.com, Inc. (NASDAQ:AMZN) is becoming less of a partner and more of a competitor. Global Equities Research’s Trip Chowdhry explained it succinctly:
“TWLO has zero chance to survive against the ‘Scale-out’ pricing structure of AWS-Connect. If history is any indication, AWS-Connect will resort to about two to three price cuts within 12 months, [and] TWLO has zero capacity to match the AWS-Connect Scale-out pricing. Pretty much TWLO is toast.”
TWLO shares extended an all-too-long downtrend on the opinion.
Stocks to Sell: GoPro (GPRO)
Nobody can deny that the action camera is very cool for what it is and what it does.
And few would deny that GoPro Inc (NASDAQ:GPRO) makes the best action camera in the business.
The painful reality that’s taken too many current and former owners of GPRO stock is, the size of the market for a top-notch, high-end action camera just isn’t that big. GPRO shares are down more than 90% since their late-2015 high for a reason. That is, sustained sales haven’t even come close to living up to expectations.
They likely never will.
But the Karma drone will reignite the company’s top line? Maybe, but not likely. If there’s one thing we should have learned from the action camera’s lifecycle, there are plenty of companies willing and able to make cheaper, “good enough” knock-offs of the Karma as well.
GoPro just doesn’t have a competitive edge, and never will. Higher quality isn’t enough.
Stocks to Sell: McDonald’s (MCD)
Don’t get the wrong idea. McDonald’s Corporation (NYSE:MCD) is going to be around for a long, long time.
It’s the juggernaut of the restaurant industry, and remains a cash cow.
But any real growth remains in question.
Did you know that annual sales for the company have fallen for three straight years now? Last year’s bottom line was just barely better than 2015’s (and still weaker than 2014’s), and McDonald’s ended the year with horrifyingly awful year-over-year comps … at least by restaurant standards.
That in itself isn’t unforgivable — just alarming. What’s so un-investable about it is that the company was doing all sorts of things to reignite its business, ranging from a new CEO to the addition of all-day breakfast to the streamlining of the menu.
Nothing seems to have stopped the bleeding. Perhaps the market has finally outgrown everything that McDonald’s can’t change.
Stocks to Sell: Abercrombie & Fitch (ANF)
It’s easy to add Abercrombie & Fitch Co. (NYSE:ANF) to a list of stocks to sell forever.
It’s one of the market’s favorite punching bags after often-controversial (and now former) CEO Michael Jeffries said some stunningly offensive things back in 2006 that ultimately spurred his ouster in 2014.
That’s not the reason one would want to steer clear of ANF going forward, though.
No, the reason Abercrombie & Fitch’s earnings continue to deteriorate and are expected to do so through next year — and beyond — has more to do with the fact that the entire brand name is inextricably linked to a look, premise and lifestyle from the 90’s that has been out of favor for a long while now.
That’s not likely to change anytime soon.
Stocks to Sell: Sears (SHLD)
It’s been said before, but it bears repeating: Sears Holdings Corp (NASDAQ:SHLD) is fighting for its life, and it’s losing the battle.
Last month, the company posted its 21st consecutive quarterly loss.
It’s not grown the top line in any quarter since 2007.
And nothing’s happened in the meantime that would suggest the retailer has gotten off the track to Doomsville.
Some believe any bankruptcy news won’t take shape until after July 8. That will mark the second complete year the company sold a trove of real estate to REIT Seritage Growth Properties (NYSE:SRG), and as such those properties can’t be clawed back by a bankruptcy court.
Make no mistake … Sears’ credit default swaps are saying professional traders are betting on a debt default from the retailer. They’ve put their money where their mouth is.
Stocks to Sell: Angie’s List (ANGI)
It was a creative idea, copying what Craigslist is and does, but with an infinitely higher degree of polish and presentation.
But when all’s said and done, the world just doesn’t need Angie’s List Inc (NASDAQ:ANGI) as much as it thought it might when it was founded back in 1995 and then turned into a fully-interactive website in 2001.
The proof of that pudding is in the numbers. Last year’s top line fell for the first time in years. And just one year after it swung to its first profit, it dipped back into the red in 2016. The pros don’t see things getting much better this year or next, according to analyst estimates.
The premise just isn’t necessary anymore, particularly now that so many other sites are doing similar things for a lower cost, if not free.
Stocks to Sell: Zynga (ZNGA)
It’s tough for some to not have a special place in their heart for game maker Zynga Inc (NASDAQ:ZNGA).
A lot of investors have such fond memories of its hit titles like FarmVille, Words with Friends and Mafia Wars.
Consumers game-playing habits are changing, however, and Zynga is having a tough time keeping up.
Not only are games a dime-a-dozen now, the big money now is in heavy-duty epic games on mobile devices … an arena that’s just not Zynga’s forte. It’s trying, but the company just doesn’t have its former magic. It may never have it again.
Stocks to Sell: BlackBerry (BBRY)
Giving credit where it’s due, BlackBerry Ltd (NASDAQ:BBRY) does indeed appear to be successfully transitioning from a hardware (smartphone) company to a software company that serves the enterprise sliver of the smartphone market.
That alone has impressed enough current and prospective owners of BBRY stock to continue giving the iconic company a chance. Take a closer look at the numbers, though. Last quarter, the top line fell quite a bit, but expenses didn’t fall nearly enough.
The ugly secret: BlackBerry has achieved very little organic growth on the software front — most of it has been bought. And while software is usually a high-margin business, it’s not been for BlackBerry.
To its credit, the company’s still got nearly $1.4 billion in the bank, and will have at least $815 million more in the bank when Apple Inc. (NASDAQ:AAPL) gets around to writing a check stemming from a recent court ruling. So the company’s got some dosh to make a few more accretive acquisitions with.
Problem is, there’s still a ton of competition in the mobile security space, and BlackBerry still doesn’t have that proverbial “killer app” to make it the go-to name in the industry. It’s still something of a hodge-podge of other company’s wares, and more deals doesn’t inherently drive the organic growth it needs to drive sooner than later.
Stocks to Sell: Twitter (TWTR)
This isn’t the first time or even the second time (or third or fourth time for that matter) Twitter Inc (NYSE:TWTR) has found itself on a list of stocks to sell.
Each of those placements was well-deserved.
It’s time to call a spade a spade — Twitter was an interesting idea, but there’s only so much you can do with a microblogging platform.
And, much of what you can do on Twitter can be done even better/easier on Facebook Inc (NASDAQ:FB).
The latest red flag(s): Last week, Twitter co-founder Evan Williams announced he was selling nearly a third of his stake in TWTR stock, and venture capitalist Peter Fenton is giving up his board seat in May. Even CEO Jack Dorsey still has his CEO job with Square Inc (NYSE:SQ). The lack of commitment from so many of the top guys speaks for itself.
Stocks to Sell: Snap (SNAP)
Last but not least, while you hate to give up on a stock just within weeks of it going public, Snap Inc (NYSE:SNAP) — the parent company of online messaging platform Snapchat — isn’t a name with a bright future, if any real future at all.
In most regards it’s a little too much like Twitter. That is, it’s a tool everyone knows about and everyone uses and everyone expects big things from … but it’s alarmingly difficult to monetize.
A recent report for marketing research outfit Fluent tells the grim tale. That is, 69% of Snapchat users flat-out ignore the ads, and 80% of the 18 to 24 year-olds that use the service look right past the advertisements injected into their screens.
While most web ads are ultimately ignored, for a platform that prides itself on delivering ads to the all-important millennial crowd, it’s clearly not bearing much fruit with them. There’s not a lot else that can be done with the one-dimensional service.
— James Brumley
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Source: Investor Place