Time to Unload: 3 Stocks in Deep Trouble to Sell Now
The end of the pandemic served as a springboard for the economy, launching us into a new bull market. I can’t blame people for being optimistic after seeing the meteoric rise of several big-name stocks. AI continues to dominate tech, carrying the rest of the sectors. As a direct result, the S&P 500 closed above $5,600 for the first time. So that’s the good news. However, even in this market condition, savvy investors should be on the lookout for stocks to sell now.
This brings us to the bad news. Unfortunately, bull markets can’t do much for companies already struggling to keep their heads above the water. Warning signs include deteriorating financial conditions, unflattering Wall Street ratings and bleak prospects. All these point to a downward spiral, and prudent investors might want to jump ship to keep their portfolios intact.
To come up the list of stocks to sell now, I screened for the following criteria:
- Must have a sell, underperform or strong sell rating from analysts,
- Negative YOY revenue growth on its latest annual report,
- Negative YOY earnings growth on its latest annual report.
Then, I arranged the stocks from highest to lowest revenue percentage loss. Here are the results:
Marcus & Millichap (MMI)
Marcus & Millichap (NYSE:MMI) is a brokerage firm specializing in commercial real estate sales, research, advisory and financing services. It operates in four main commercial real estate business segments:
- Properties
- Middle market
- Private client market
- Larger transaction market.
The company serves its clients with different types of property portfolios that match their needs, helping to maximize their value while securing competitive financing from lenders. Marcus & Millichap also caters to the private market through its investment brokerage and financing.
Marcus & Millichap had a rough 2023. President and CEO Hessam Nadji states that the “ongoing market disruption created by the Fed’s fight against inflation and persistent interest rate volatility impacting real estate valuations” negatively impacts the company’s performance.
So, let’s get into the gory details. FY 2023’s revenue is down a full 50.4% YOY, reflected evenly across all its revenue sources. The year ended with a $0.88 net loss per share, compared to FY 2022’s $2.59 profit.
Nadji states that the company is focused on maintaining a strong balance sheet and improving client relations. However, analysts aren’t impressed with the news; MMI stock currently has a sell rating, which might be a good enough reason to tack MMI on your list of stocks to sell now.
Medifast (MED)
Known for being the parent company of OPTAVIA, one of the fastest-growing health and wellness communities, Medifast (NYSE:MED) provides a comprehensive approach to achieving lasting optimal health and well-being through clinically proven health benefits and evidence-based tools. These tools include a habit-creation framework guided by its independent coaches and supportive community.
The company also provides access to board-certified affiliated clinicians and medications that help treat obesity and other health conditions.
Medifast’s FY 2023 report painted quite a bleak picture for the company. Revenue is down 32.9% YOY to $1.1 billion. The bottom line is no better, dropping from $12.73 per diluted share in FY 2022 to $9.10. Even on a non-GAAP basis, EPS is still 33.5% lower YOY.
“We are realigning our business to respond to the evolving dynamics of the weight loss industry and to aggressively execute on bold initiatives to transform our business model,” said Chairman and CEO Dan Chard.
Analysts maintain MED stock an “underperform” rating until things turn around. So when exactly is that?
“This remains a challenging market,” says Chard, “and it will take time to navigate the transformational path that we are on.”
In the meantime, investors holding onto Medifast stock might want to sell the stock and shop around for better prospects.
Worthington Enterprises (WOR)
Worthington Enterprises (NYSE:WOR) is a diversified manufacturing company that operates into two main business segments:
- Consumer products: tools, celebrations and outdoor living products.
- Building products: heating, water and cooling solutions.
Worthington Enterprises is known for its focus on providing value-added steel processing and manufacturing. The company’s product brand portfolio includes Coleman, Garden-Weasel, PowerCore and HALO. It also operates in lightweight, customizable LPG composite cylinders.
Worthington recently announced its FY 2024 results — and, in case you hadn’t guessed, it’s not pretty. Net sales dropped from $1.42 billion to $1.25 billion, a 12% decrease. While expenses were down for the year, the report still recorded a $73.5 million operating loss.
The company was profitable in FY 2024, but diluted EPS decreased from $5.19 to $2.20. While management is cautiously optimistic, analysts still rate WOR stock an “underperform.” If you’re holding on to the company, maybe it’s time to consider WOR as an option in stocks to sell.
On the date of publication, Rick Orford 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
