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…
Five Below (NASDAQ: FIVE) Retailer Under Pressure Amid Potential Tariff Hikes
Retailers are bracing for more turbulence with the possibility of Donald Trump returning to the White House, and new tariffs could be a significant blow to companies relying heavily on imports. Trump has discussed implementing a 20% tariff on all imported goods and a hefty 60% rate on Chinese imports, which would directly impact profit margins across the retail sector.
Five Below is a name that stands out as especially vulnerable. The stock is already down 59% this year, and higher tariffs could worsen the outlook for this discount retailer. With Five Below sourcing a substantial portion of its inventory from China, the company’s costs would skyrocket, making it even harder to recover. Wells Fargo analysts have highlighted this risk, and while some on Wall Street are hopeful for a rebound with a potential 20% upside, the current risks overshadow that optimism. Given the combination of external pressures and recent performance, FIVE is a sell in our book.
Retailers like Five Below will face tough headwinds, and the current environment signals more downside than upside. Consider trimming or exiting positions as these tariff risks loom.
Apple (NASDAQ: AAPL) Limited Upside Heading into Earnings
Apple is gearing up to report its third-quarter results on October 31, with expectations high that its new feature, Apple Intelligence, will boost iPhone sales. However, while the company continues to innovate, we’re concerned about the stock’s current valuation.
Apple is now trading at 31 times next year’s earnings, compared to its five-year average of 26 times. Itau analysts have flagged this elevated valuation, noting that despite the stock’s strong performance, the broader environment isn’t as supportive as it once was. With Apple’s stock price already stretched, it could be vulnerable to a pullback if earnings or future guidance fall short of lofty expectations.
For investors sitting on gains, it might be a good time to take some profit off the table. AAPL is a great company, but at these levels, the stock may have limited upside in the near term.
United Airlines (NASDAQ: UAL) Severely Overbought According to the Charts
United Airlines has seen an impressive run this year, surging over 82% in 2024, largely fueled by stronger-than-expected Q3 results and the potential for stock buybacks. However, we believe the stock is now overextended and ripe for a pullback.
United Airlines currently has a 14-day RSI of 85.9, well above the 70 threshold that typically signals an overbought condition. This suggests the stock may have rallied too far, too fast. While analysts are still bullish, with 87% holding buy ratings and a 20% upside projection, we think the recent run leaves little room for error, especially with rising fuel costs and potential macroeconomic headwinds.For those holding UAL, it may be time to lock in gains before the stock takes a breather. The technicals are flashing caution, and a pullback seems more likely than further upside in the near term.
