5 stocks to sell now
This past year was tough for many stocks. Some analysts say 2023 is not looking good for these five stocks, and investors would be wise to jettison them now from their portfolios.
Boston Beer (Sam): Headquartered in Boston, Massachusetts, Boston Beer is known for its Samuel Adams and Dogfish Head beers, Truly hard seltzer and other brands. U.S. hard seltzer consumption soared in 2020. But the hard seltzer craze has faded, say analysts at Goldman Sachs, putting pressure on Boston’s revenue growth. It’s doubtful that Boston’s other products, such as Twisted Tea (hard iced tea), can make up for the slowdown, they conclude.
Cable One (CABO): This telecom firm provides internet, voice and cable TV services in 24 states. Shares tumbled 60% over the past year. Parnassus fund managers Matt Gershuny and Lori Keith say they are reassessing their stake in the company.
Cable One has an opportunity in rural markets, Keith says, but two trends pose hurdles. Viewers are dropping cable TV to stream over the internet. And fixed-wireless internet — using wireless technologies to cover the last mile — is catching on in areas where a fiber network (like Cable One’s) is difficult to deploy.
D.R. Horton (DHI): Despite weak trends in U.S. housing data and skyrocketing mortgage rates, homebuilder D.R. Horton’s shares have risen since a low in June. Fifteen of 21 analysts who follow the stock are bulls — though not Kenneth Leon, director of equity research at CFRA Research. “We take a contrarian opinion with a ‘sell’ rating, as we believe new-home demand has not hit bottom,” he says. And it’s too early to bargain hunt. “We believe the U.S. housing market is in a downward cycle, just entering a recession, and we do not expect to see signs of a housing recovery anytime soon.”
Meta Platforms (Meta): Despite its fall from the pantheon of megatech superstars, Meta, the former Facebook, still has fans. The stock earns an average rating of “outperform” from the 58 analysts who cover it, according to S&P Capital IQ.
Investment firm Needham is not among the bulls, however, with an “underperform” call on Meta, which, by mid-December, was down about 65% for 2022. Lest you be tempted to bottom-fish, Needham analysts note the high costs of Meta’s pivot from social media to virtual reality (the Metaverse) and the distant payoff.
“Metaverse investment levels are the most expensive gamble by any company we’ve ever covered,” they say. Because Meta talks about returns on those investments in terms of 2030, “there is no need to be in Meta today.”
Nasdaq (NDAQ): Call it a victim of its own success. The stock exchange that is home to tech-stock heavyweights has successfully morphed into a fintech company, with more emphasis on providing market data and analytics, as well as technology for trading, clearing, antifraud surveillance and other services.
Nasdaq shares now trade at a premium that BofA Securities analysts think is too rich, given signs of decelerating growth and other headwinds. They recently downgraded the shares from “buy” to “underperform.” Among the risks facing Nasdaq: the disengagement of individual investors drawn into the market during the pandemic who are now returning to work and put off by market losses in 2022.