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…
Himax Technologies (NASDAQ:HIMX) – Falling Behind in the Semiconductor Race
In the bustling world of semiconductors, where generative AI is propelling many companies to new heights, Himax Technologies finds itself lagging. As a fabless semiconductor outfit, Himax specializes in display driver integrated circuits, crucial for the visual performance of TVs, tablets, and automotive displays. However, these products aren’t riding the same wave of demand benefiting AI-driven semiconductor tech.
The numbers tell a concerning story. Himax’s revenue for the fourth quarter dropped to $227.6 million from $262.2 million the previous year. Even more alarming, profits plummeted to $23.5 million, or 13 cents per share, a significant fall from $42.1 million and 24 cents per share year-over-year.
With HIMX stock down 11% in 2024, the writing’s on the wall. Despite the semiconductor sector’s overall bullish trend, Himax’s focus areas are not capturing the market’s current growth drivers. For investors holding HIMX, it might be time to reassess and consider reallocating to more promising opportunities within the tech sphere.
Chipotle Mexican Grill (NYSE:CMG) – Too Hot to Handle?
Chipotle’s stock has been on a fiery run, soaring over 75% in the past year, making it one of the market’s spiciest performers. But as tempting as it may be to jump on this bandwagon, it’s time for a reality check.
The surge in Chipotle’s shares has been largely driven by Reddit traders chasing quick gains from momentum stocks. The excitement reached new heights with the announcement of a 50-for-1 stock split, a move often seen as a way to make shares more accessible to a broader base of investors. However, this kind of rapid ascent raises questions about sustainability.
Despite its popularity, Chipotle is nearing saturation in the U.S. market, and its potential for international expansion remains uncertain. The concept’s novelty is undeniable, but whether it can replicate its stateside success globally is still up for debate.
Now, with CMG trading at over 50 times forward earnings, the stock’s valuation is entering hard-to-justify territory. While there’s no denying Chipotle’s culinary appeal, the same can’t be said for its current stock price after such an explosive rally.
For investors, this might be the perfect time to take profits off the table. Chipotle’s fundamentals might be solid, but at these prices, the risk of a pullback is becoming increasingly hard to ignore.
Nauticus Robotics (NASDAQ:KITT) – Sinking Ship or Just Rough Seas Ahead?
Nauticus Robotics, a name synonymous with cutting-edge ocean technology, has been making waves with its innovative AI-driven autonomous robots and software solutions. From the Aquanaut robots to the ToolKITT cloud software, Nauticus seems to have all the right tools for revolutionizing marine exploration and intervention services.
However, diving into their latest financial report reveals a stormy picture that’s hard to ignore. Despite the futuristic appeal of their products, Nauticus’s financial health is taking on water. The third-quarter results were particularly sobering, with total revenue plunging 47% compared to last year. Even more concerning, operating losses widened by 36%, largely due to a significant uptick in general and administrative expenses.
The company’s own admission in the report is a red flag for any investor: Nauticus is currently unable to generate enough revenue to cover its operating costs, let alone fund its ambitious projects. This financial turbulence, coupled with declining revenues and escalating expenses, raises serious doubts about the company’s viability.While Nauticus Robotics may be charting a course toward a future of high-tech ocean exploration, the financial currents seem to be against them. For investors, this might be the time to consider jumping ship before the waters get even rougher.
