Trim the Fat: 3 Stocks to Exit Before 2023 Wraps Up
Certain stocks begin to lose their luster in the ever-evolving world of stock investing, marked by businesses consistently impressing with powerful earnings, cutting-edge technologies, and growing customer bases. This shift positions stocks to sell before 2024, especially as they navigate and sometimes stumble in their corporate journey.
Furthermore, The Federal Reserve’s inclination to cut interest rates in 2024, should spearhead a bull-run in the upcoming months. This move syncs with the Biden administration’s goal for a ‘soft landing’, avoiding what was expected to be a painful recession. It’s a strategy mirroring the Fed’s softer approach.
Strategic portfolio adjustments become vital as the economy transitions from a recession toward stability. Now is the ideal moment to exit risky and overvalued positions. If you want safer investments, start by selling off these three stocks.
AMC Entertainment (AMC)
AMC Entertainment (NYSE:AMC), the renowned American movie theater chain, epitomizes the unpredictability of today’s market. Its shares have plummeted by 84.33% year over year, underscoring its significant underperformance.
Moreover, AMC’s efforts to stabilize through a reverse stock split and subsequent dilutive actions have failed to reassure shareholders. These moves, highlighting the company’s struggle to meet investor expectations, have sparked concerns about its financial viability and strategic path, casting doubt on its future prospects.
Furthermore, the 2023 APE conversion, mired in legal issues and dilution claims, adds complexity to AMC’s situation. Despite its eventual approval, this controversial decision has eroded investor trust, casting a shadow over company governance. Consequently, this tumultuous period points to a challenging future for the theater giant.
Nikola (NKLA)
Nikola Corporation (NASDAQ:NKLA), known for manufacturing heavy-duty commercial electric and fuel-cell vehicles, faces significant challenges that have shaken investor confidence. The company’s history, tainted by its founder’s dubious past and accusations of deceiving investors about its technology, looms large over its present. In this context, Nikola’s struggle for credibility is evident as trust becomes increasingly precarious.
Moreover, recent financials reveal troubling signs. In the third quarter, its non-GAAP earnings per share plunged to 30 cents, missing targets by 16 cents. In its most recent quarter, Nikola Corporation reported a notable drop in sales, registering a negative figure of -$1.73 million, a significant drop compared to the previous year’s $24.21 million.
Compounding these troubles, Nikola faced a severe setback in August with a safety recall of all its battery trucks. The recall, prompted by defective batteries leading to fire risks, further tarnishes Nikola’s reputation. This series of events amplifies doubts about the company’s reliability and future in the competitive electric vehicle market.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC), a key player in the cannabis industry, saw its stock plummet by about 14% in premarket trading recently. This sharp decline followed the announcement of a 1-for-10 share consolidation strategy aimed at Nasdaq compliance. The move highlights the company’s challenges and is raising concerns among investors.
Moreover, Canopy Growth challenges its third-quarter earnings report. The company’s GAAP earnings per share stood at a negative 21 cents, signaling declining profitability. Moreover, its quarterly revenue amounted to $70 million, marking a worrisome 20.4% year-over-year drop. Additionally, the declining EBIT margin, currently at a negative 100% compared to the sector median of almost 1%, underscores its struggle in a fiercely competitive market. This makes it one of those stocks to sell before 2024.
Furthermore, the company sought creditor protection for its BioSteel Sports Nutrition unit and plans to sell it. Additionally, they’re selling their headquarters back to Hershey Co. (NYSE:HSY), streamlining operations amidst market uncertainty and raising questions over its sustainability.
On the date of publication, Muslim Farooque 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
