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…
Paramount Global (PARA) – Sliding Toward Uncertainty
The outlook for Paramount Global, the parent company of CBS television, continues to darken. Wall Street’s consensus indicates a gloomy future, with the stock having declined by 21.5% over the past year. Analysts suggest further declines are likely, with a projected drop of another 29.1% based on current target prices. This month has been particularly harsh, with shares falling 8.2% due to speculations around a potential merger with Skydance Media. If this merger proceeds, Paramount might need to raise up to $3 billion in new equity, which adds another layer of risk for potential and current investors.
Moreover, Paramount’s recent decision to significantly cut its quarterly dividend could be a major concern for those who invest for income. Such a cut often signals issues with cash flow or the need to conserve capital, neither of which bodes well for stock performance in the near term. Given these factors, PARA finds a spot on this week’s watchlist of stocks to avoid, suggesting that investors tread carefully around this stock in the current climate.
Bank of Hawaii (BOH) – Continued Downtrend Amid Regional Banking Turmoil
Bank of Hawaii has been facing a tough market, with its shares dropping nearly 25% from their 52-week high in December 2023. The regional banking sector has been hit hard since the Federal Reserve began hiking rates in 2022, compounded by the ripple effects of the Silicon Valley Bank collapse in March 2023. However, Bank of Hawaii stands out for its particularly sharp decline, underperforming even within its struggling sector.
Over the last 12 months, BOH has seen its stock value diminish by 21.9%, a stark contrast to the 12.1% pullback observed in the SPDR S&P Regional Banking ETF, a benchmark that reflects the broader regional banking landscape. Analysts from FactSet have a bleak outlook too, forecasting an additional 5.9% slide in the bank’s stock value. This ongoing underperformance and negative analyst sentiment secure Bank of Hawaii a spot on this week’s list of stocks to sell, as investors might consider reallocating from BOH to more stable financial entities or different sectors altogether.
Matterport (MTTR) – Struggling in the VR Sector
Matterport’s stock has been on a significant decline, dropping 30% since January and signaling a tough year ahead within the competitive landscape of VR stocks. This downward trend has garnered a bearish outlook from analysts, who predominantly predict that the stock will underperform throughout 2024.
Despite some potentially positive developments, such as a strategic partnership with Crunch Fitness, the company faces a steep uphill battle. These efforts, although steps in the right direction, may not be enough to counteract the broader challenges that Matterport has encountered. Adjusting to the changing economic conditions that once buoyed its stock has proven difficult, leading to drastic measures including a 30% reduction in its workforce as part of a broader cost-cutting initiative.
CEO RJ Pittman emphasized that these tough decisions are meant to “sharpen our strategic focus and accelerate our path to profitability.” This plan was unveiled in the second quarter of 2023, yet the hoped-for turnaround in Matterport’s fortunes remains elusive. Investors should be wary of the stock’s current trajectory and consider the ongoing challenges the company faces when evaluating its place in their portfolios.
