7 Tech Stocks to Sell Before They Die
The miserable year for tech stocks just won’t end, so nobody could really blame you if you started looking for tech stocks to sell.
While tech seemed to have a resurgence in August and gave growth investors some hope in an utterly miserable year on the market, the sector is once again on the downturn. The Invesco QQQ Trust (NASDAQ:QQQ), a leading tech exchange traded fund, is down 15% since August.
And there’s really no indication that tech stocks will bounce back any time soon. Inflation at its highest rate since the 1980s will force the Federal Reserve to continue to raise interest rates; a strong U.S. dollar is hurting tech companies that rely on imports and the Russia-Ukraine war will continue to cast a shadow on the global economy.
Sure, there are some good tech stocks out there. But there are some real dogs as well as identified by my Portfolio Grader. Here are seven tech stocks to sell now.
| PEGA | Pegasystems | $33.60 |
| SFIX | Stitch Fix | $4.18 |
| INTC | Intel | $27.18 |
| PENN | Penn Entertainment | $31.76 |
| PYPL | PayPal Holdings | $94.23 |
| ZM | Zoom Video Communications | $78.32 |
| DDI | DoubleDown Interactive | $9.50 |
Pegasystems (PEGA)
Enterprise software firm Pegasystems (NASDAQ:PEGA) was one of the first customer relationship management companies. Now it’s working in robotic process automation and business process automation.
It offers an AI-powered software-as-a-service (SaaS) platform that helps business and government agencies improve workflow and automation.
The threat of a recession weighs heavily on PEGA stock. In July, the company acknowledged that its clients were seeing pressure from slower global economic growth.
That fear is reflected in the stock price – down nearly 70% so far this year and down 31% since July.
Earnings in the second quarter were misses on both revenue and earnings. Pegasystems reported revenue of $275.34 million and a loss per share of 38 cents. Wall Street was expecting revenue of $338.31 million and a gain of 5 cents per share.
PEGA stock has an “F” rating in the Portfolio Grader.
Stitch Fix (SFIX)
Stitch Fix (NASDAQ:SFIX) the e-commerce fashion and clothing company, is having just as bad of a year.
The stock is down 78% to penny stock territory (less than $5 per share) as a tightening economy leaves less discretionary income for Stitch Fix customers to spend on new outfits.
On the surface, Stitch Fix seems to be a great business subscription idea – customers go online to complete a style profile and to put in the clothing sizes. A stylist uses that information to pick out a few clothing items and sends them to the customers to either buy or return.
But there are two big things working against SFIX right now – the weakened economy and the fact that many people aren’t leaving their homes to go to work as often as they did before Covid-19. People don’t need as many work outfits as they did in 2019, and I don’t know when that’s going to change.
Earnings for the company’s fiscal fourth quarter continued to disappoint. Revenue of $481.9 million was less than analysts’ expectations of $488.79 million. An earnings loss of 89 cents per share was worse than the anticipated loss of 60 cents per share.
SFIX stock also has an “F” rating in the Portfolio Grader.
Intel (INTC)
I actually took a deep dive into Intel (NASDAQ:INTC) stock pretty recently. It wasn’t a pretty picture. Intel has lost its position as a chip leader and isn’t likely to get it back anytime soon.
On top of that, the personal computer market is expected to drop by 10% this year, or even more, according to Intel CEO David Zinsner.
Second quarter earnings were pretty disastrous, with earnings of $15.32 billion coming in lower than the Street’s estimate of $17.92 billion. EPS of 29 cents per share was much worse than expectations of 70 cents EPS.
Intel stock is down 46% so far this year, has an “F” grade in the Portfolio Grader.
Penn Entertainment (PENN)
I don’t have a lot of faith these days in Penn Entertainment (NASDAQ:PENN) stock. The casino and entertainment company bought 36% of Barstool Sports in 2020 and recently announced it was exercising its rights to buy 100% of the company.
PENN bulls thought that the Barstool partnership would be huge for PENN because it would theoretically open the door for the company to provide in-game betting across the country. But the rollout of legalized gaming has been slower than anticipated and enthusiasm for the partnership has definitely waned.
PENN has shown a habit in recent quarters of hitting its revenue goals but missing on earnings – and that trend continued in the second quarter of this year. Revenue of $1.63 billion beat analysts’ expectations for $1.6 billion. But the 14-cent EPS was much worse than expectations for EPS of 50 cents.
PENN stock is down nearly 40% so far in 2022. And like the others on this list, PENN has an “F” rating in the Portfolio Grader.
PayPal Holdings (PYPL)
PayPal Holdings (NASDAQ:PYPL) has actually shown signs of life in recent weeks. The stock was down below $70 as recently as July but currently tops $94 to show more than a 30% gain over the last three months.
But as I wrote recently, don’t be fooled by this sudden move up in PYPL stock.
While analysts are projecting improved EPS in the future thanks to cost-cutting and share repurchases, I think the market is already pricing in PayPal’s improved operating performance. Meanwhile, the market conditions that initially pushed PayPal lower are still a factor, so it’s likely that PYPL stock will drop again, soon.
True, earnings for the second quarter were better than anticipated – revenue of $6.81 billion was better than the $6.78 billion that analysts expected. EPS of 93 cents was 6 cents better than predicted. But I’m still not sold on PYPL stock.
Neither is the Portfolio Grader, which gives PYPL stock an “F” grade.
Zoom Video Communications (ZM)
When you think about Zoom Video Communications (NASDAQ:ZM) you probably remember one of the many Zoom calls you were on during Covid-19, when Zoom meetings became the norm for many businesses and schools.
You may also have some wistful feelings if you missed out on ZM’s huge gains in 2020 and 2021.
But those boom years are over and ZM stock is still feeling the pain. Down more than 57% so far in 2022, ZM is one of the tech stocks to sell on continuing weakness.
. Revenue in Q2 was $1.1 billion, narrowly missing analyst expectations of $1.2 billion. Guidance for the third quarter of $1.09 billion to $1.1 billion is lower than the $1.15 billion that the Street expected.
So, it’s unlikely that ZM stock will give you anything but pain for the rest of the year. It gets an “F” rating in the Portfolio Grader.
DoubleDown Interactive (DDI)
DoubleDown Interactive (NASDAQ:DDI) develops digital games for mobile and web-based platforms.
It specializes in casino-style games with its flagship title being DoubleDown Casino. Another popular title is the zombie survival game Undead World: Hero Survival, which has been downloaded more than 1 million times in its first year.
However, this doesn’t appear to be a good time to double down on DDI stock. Revenue of $80.57 million in the second quarter was down 13% from a year ago. The company also saw significant drops in net income (down 284%), EPS (down 264%) and profit margin (down 313%).
DDI stock is down more than 37% so far this year, far worse than fellow gaming stocks Electronic Arts (NASDAQ:EA) and Take-Two Interactive (NASDAQ:TTWO) making it one of the tech stocks to sell while you still have a chance.
Unsurprisingly, this zombie of a stock has 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.
