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…
Target (NYSE:TGT)
Despite its widespread popularity, Target’s allure for investors is diminishing due to a noticeable drop in customer traffic.
The retailer has been hit hard by reduced consumer spending and persistent supply chain issues. These challenges are reflected in its stock performance, which has fallen 43% from its 2021 peak, including a 14% drop in the past year. While Target’s dividend – currently at 3.1% and growing for 53 consecutive years – is a positive aspect, it hardly compensates for the stock’s overall decline.
The company’s third-quarter earnings report revealed a dip in revenue to $25.4 billion, down from $26.5 billion the previous year. Moreover, the outlook for the fourth quarter isn’t promising, with comparable sales expected to decrease by mid-single digits.
For investors, Target’s current situation suggests it might be time to reconsider its place in their portfolios. The stock, once a retail darling, now appears overvalued in light of its recent performance and near-term prospects.
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DraftKings (NASDAQ:DKNG)
DraftKings has been on a remarkable run, with its shares soaring about 163% over the past year. This surge in investor confidence is largely due to the company’s robust position in the rapidly expanding U.S. online gambling market and the anticipation of DraftKings achieving profitability sooner than expected.
However, despite the market’s optimism about DKNG’s future, there’s a notable trend of insider selling that raises some eyebrows. Over the last year, C-level executives and board members have offloaded $175.87 million worth of DKNG stock, with $88 million of that occurring in Q4 2023 alone.
This insider activity might be a red flag for investors. My analysis suggests that DraftKings’ growth could be slowing down. The intensifying competition and the maturing U.S. gambling market are potential headwinds that could lead to underwhelming performance in the future. As a result, DKNG might end up relinquishing a significant portion of its recent gains.
For those holding DKNG stock, it might be wise to consider these factors and reassess whether this high-flying stock aligns with your investment strategy in the face of potential challenges ahead.
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Urgent.ly (NASDAQ:ULY)
Known for its innovative mobility assistance software platform, Urgent.ly is facing some roadblocks. This tech firm, offering solutions for common vehicle issues like lockouts, tire changes, and towing, integrates location-based services, real-time data, AI, and machine-to-machine communication. However, its growth trajectory isn’t living up to expectations.
While Urgent.ly saw a 26% annual revenue increase from 2021 to 2022, its quarterly revenue growth in 2023 has been underwhelming. The most recent figures show a mere 3% year-over-year increase in Q3 revenue, a significant slowdown compared to previous years.
Since its IPO in late October 2023, Urgent.ly’s shares have plummeted by over 47%. For investors, this could be a signal to reassess the stock’s place in their portfolios, considering the company’s slowing growth and the recent downturn in its stock performance.
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