The right stocks can make you rich, but the wrong ones? They can drain your wealth, fast. While the mainstream financial news is often filled with optimistic stories about certain companies, the reality is that some stocks pose serious risks right now.
Here’s a rundown of three stocks that investors should consider steering clear of. These companies have become “portfolio poison” for reasons ranging from sky-high valuations to deteriorating fundamentals.
Costco Wholesale Corporation (COST) Overvalued and Vulnerable to a Pullback
Costco has been one of the best performers this year, but at this point, the stock looks overvalued. Hitting all-time highs has triggered some alarm bells, especially with its price-to-earnings (P/E) ratio sitting well above the industry average. According to analysts, Costco is now one of the most overbought stocks, with a 14-day Relative Strength Index (RSI) reading of 81.7, signaling a potential pullback is ahead.
While the company itself is strong, the stock’s current valuation could make it volatile, and analysts are advising caution. Market consensus shows a price target only 1% above its current level, which doesn’t leave much room for further growth in the near term.
Marriott International (MAR) Overbought with Limited Upside
Marriott has enjoyed a stellar run, with its stock trading near an all-time high. However, a high RSI suggests the stock is overbought, and this could signal an upcoming downturn. Options traders have taken a bearish stance, and analysts are split, with many holding neutral ratings on the stock.
With Marriott’s strong performance potentially cooling off, a number of analysts are highlighting limited upside from here. The stock’s rally could be losing steam, making it a candidate for those looking to lock in gains before a potential pullback.
Harmony Gold Mining (NYSE: HMY) Mounting Headwinds for Gold Mining Operations
Harmony Gold Mining has been under intense pressure. Rising operational costs and declining gold prices have severely hurt the company’s prospects. Analysts have become overwhelmingly bearish, with no buy or hold ratings currently on the stock. Instead, the consensus is to sell, with a price target suggesting more than a 50% downside.
Recent reports from JPMorgan have only deepened the gloom, lowering their price target to $4.80 from $5.80, citing ongoing cost challenges and inefficiencies. For investors, Harmony Gold looks increasingly like dead weight in the portfolio, especially if gold prices continue to fall.
