The right stocks can make you rich and change your life.
The wrong stocks, though… They can do a whole lot more than just “underperform.” If only! They can eviscerate your wealth, bleeding out your hard-won profits.
They’re pure portfolio poison.
Surprisingly, not many investors want to talk about this. You certainly don’t hear about the danger in the mainstream media – until it’s too late.
That’s not to suggest they’re obscure companies – some of the “toxic stocks” I’m going to name for you are in fact regularly in the headlines for other reasons, often in glowing terms.
I’m going to run down the list and give you the chance to learn the names of three companies I think everyone should own instead.
But first, if you own any or all of these “toxic stocks,” sell them today…
Mogo Inc (MOGO)
MOGO stands out as one fintech stock to steer clear of. With its shares hovering near a 52-week low at $1.53, Mogo has firmly established itself within the realm of penny stocks. Over the last year, MOGO stock has experienced a significant 43% decline, and its five-year performance paints an even bleaker picture, with an 83% drop. Across various metrics, this stock has demonstrated its unsuitability as an investment choice. Considering the multitude of more established and profitable fintech stocks in the market, there appears to be no compelling reason to consider an investment in MOGO stock.
Mogo offers a range of financial services, including loans, mortgages, Visa prepaid credit cards, credit scores, and identity fraud protection. While these services might seem enticing at first glance, investors are urged to exercise caution when evaluating this company. Last autumn, Nasdaq, the exchange on which Mogo is listed, threatened to delist the company’s stock due to its failure to maintain a share price above $1, as mandated. This incident serves as a glaring warning sign, accentuating the company’s lack of profitability, deteriorating financial performance, and declining user base.
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Actelis Networks (ASNS)
In contrast to the large-cap players like T-Mobile and Verizon, Actelis Networks is a telecom company with a modest market capitalization, currently standing at $3 million.
This organization specializes in delivering high-performance broadband services over copper and fiber networks, catering to telecom service providers, businesses, and municipalities. Actelis Networks collaborates with educational campuses to enhance connectivity in areas like dormitories and laboratories. Simultaneously, it partners with municipalities to provide intelligent traffic system solutions, encompassing electronic signs, cameras, controllers, and sensors.
The second-quarter revenue for Actelis Networks amounted to $3.74 million, reflecting a notable decline from the previous year’s figure of $4.95 million. The company attributes this downturn to a 64% reduction in business from telecom providers. This shift is aligned with Actelis Networks‘ strategic pivot from traditional telecom services towards focusing on the Internet of Things.
While Actelis may not be embracing its telecom identity wholeheartedly, at present, it remains a telecom company that warrants consideration for divestment.
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Vuzix (VUZI)
When the concept of the metaverse held the promise of becoming a trillion-dollar industry, Vuzix saw its stock surge dramatically, soaring from around $4.10 to a peak of $30.57. This meteoric rise was fueled by the fervor surrounding augmented reality (AR), virtual reality (VR), and all things related to the metaverse. However, VUZI shares now trade at just under $4 each, and they don’t present a compelling investment opportunity at this time.
While it’s true that second-quarter sales showed a robust 56% year-over-year increase, the company’s profitability and cash flow metrics leave much to be desired. GAAP earnings remained in negative territory at -$9 million, albeit showing a slight $1 million improvement compared to the previous year. Furthermore, Vuzix reported negative cash flow of -$7.9 million, marking its weakest performance since the fourth quarter of 2021. Unless Vuzix can address these challenges and enhance its financial position, it’s best to exercise caution.
As highlighted by InvestorPlace contributor Ian Bezek, it’s important for traders not to be deceived by VUZI’s low share price. The company still boasts a substantial market capitalization of nearly $250 million, a considerable figure for a company with significant operating losses, relatively modest revenues, and limited commercial traction.
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