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…
C3.ai Inc (AI)
C3.ai (AI) may have a catchy ticker symbol that aligns with the market’s enthusiasm for artificial intelligence. Still, there really isn’t much else to say about AI when it comes to considering it for our portfolios. AI is slow-moving, unprofitable, and lacks the potential to benefit from the current excitement surrounding consumer-facing AI. It isn’t certain that C3.ai will capitalize on the opportunity, making it a stock to avoid; it is largely inflated at this point, and, unfortunately, many of us were late to the rally.
AI’s stock is up year-to-date by an insane 285.52%, and the case for it being overvalued is an easy one to make when looking at the negative numbers. AI has a 2.61 beta and an ROE of -28.02% and shows $266 million in TTM revenue, from which it lost $268 million thanks to its crazy -100.77% profit margin. AI shows negative year-over-year growth in net income (-11.19%), net profit margin (-11.05%), and operating income (-29.65%). With a 10-day average trading volume of roughly 52 million shares, AI has a median price target of $23.50, with a high of $50 and a low of $14, suggesting the potential for a price decrease anywhere from -45% to -67%. AI has 6 buy ratings and 4 hold ratings.
Meta Materials (MMAT)
Semiconductor company Meta Materials develops and produces functional materials and nanocomposites, particularly in lithium battery materials. The micro-cap company is losing far more money than it’s bringing in. In the fourth quarter MMAT reported revenues of $1.4 million and operating expenses of $24.8 million. The company posted a net earnings loss of $79.1 million for the entire year.
Not to mention, the company is embroiled in litigation on accusations of involvement in “spoofing, naked short selling, market manipulation, and fraud.” Meta Materials share price is down 81% this year, falling to less than 25 cents per share.
Mondelez International Inc. (MDLZ)
Recession fears and concerns around the financial sector have investors seeking refuge in consumer staples stocks to shore up their portfolios. However, based on technical analysis some of these traditionally defensive tickers now seem overbought. Case in point – Mondelez.
A stock is considered overbought if its 14-day RSI goes above 70, and is typically seen as an indicator to consider cutting back on exposure. By this measure, with an RSI of 89.2 MDLZ tops the list as one of the most overbought names from the S&P 500.Wall Street sees little-to-no upside potential for the stock over the next twelve months. According to FactSet, the average analyst price target for Mondelez implies an upside of just 3%.
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