Take the Money and Run: 3 Stocks to Ditch Before Year-End
Equities markets have been through some turbulent weeks. The S&P500 and Nasdaq are only returning 10.0% and 26.8% since the start of the year. For context, in September, these indices returned around 34.1% and 17.6%, respectively, which speaks to the volatility markets have experienced recently. This has led to stocks to sell.
Geopolitics and uncertainty on the direction of real interest rates have led investors to lose confidence in certain equities.
The three stocks below have appreciated significantly in 2023, and investors are probably better off cashing in now, rather than later.
AEHR Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a global provider of test systems for burning-in and testing logic, optical and memory integrated circuits. The equipment provider sells machines called FOX systems and these machines require consumables called WaferPak Contactors and DiePak Carriers. Together, the machines and consumables are designed for testing different types of chips.
Market-watchers and public equities investors alike have given AEHR’s shares much attention this year due to the company providing testing equipment and services for electric vehicle (EV) components. Given that demand for electric vehicles has continued unabated well into 2023, AEHR is benefitting from strong demand for its products, even among leading EV makers and suppliers like Tesla (NASDAQ:TSLA). The firm also designs equipment to test silicon photonics devices, which are an alternative to traditional fiber optic transceivers currently used in data center and telecommunication infrastructure. This makes it one of those stocks to sell.
At the beginning of August, the firm’s shares had risen 167.1% year-to-date (YTD), but now shares have only returned 57.2%. AEHR’s recent earnings release, which did not raise guidance for their fiscal year 2024, coupled with broader macro volatility, have precipitated in significant selling pressure. Investors who have been holding since the beginning of the year should cash in now before its too late.
IonQ (IONQ)
Founded in 2015 by two leading quantum physicists from the University of Maryland and Duke University, IonQ (NYSE:IONQ) was the first pure-play quantum computing firm. IonQ uses trapped ion technology to build its quantum computers. Thus far, the company has been able to partner with Amazon Web Services (AWS) and other cloud providers to offer its quantum computing services on public cloud networks.
While IonQ is still essentially pre-revenue, the company does boast a strong balance sheet with $375 million in cash and short-term investments with no debt. And while IonQ is a high-risk, high-reward investment, shares have paid off handsomely for early investors this year. Shares returned as much as 470.4% in early September, but markets have hit several macro hurdles in the past few weeks, and those amazing gains have begun to disappear. IonQ’s stock has only returned 264.9% year-to-date. Investors should definitely cash in their investment now before shares depreciate even further.
AppLovin Corporation (APP)
AppLovin (NASDAQ:APP) is a leading mobile gaming company that has seen impressive growth in 2023. One of the main drivers of AppLovin’s success is its diversified portfolio of games across different genres, platforms and markets. AppLovin owns and operates more than 200 games, including popular titles such as Matchington Mansion, Project Makeover, Wordscapes and Gardenscapes. Another factor that contributes to AppLovin’s performance is its innovative technology platform that enables efficient user acquisition, monetization and analytics. AppLovin leverages its own proprietary software development kit (SDK) and artificial intelligence tools to optimize the performance of its games and deliver personalized experiences to its users. All in all, it’s one of those stocks to sell.
The company’s successful foray into creating AI tools, coupled with strong quarterly revenue beats in 2023, helped the success of its shares in 2023. Shares have appreciated 256.9% since the start of the year. However, as investors begin to focus on profits rather than revenue growth, AppLovin’s share growth could be compromised. Thus, investors should consider selling their shares now.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
