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…
Tesla (TSLA) – Tariffs, Competition, and Margin Pressure Could Weigh on Shares
Tesla has already had a rough start to the year, and the latest round of tariff concerns isn’t making things any easier. With the Biden administration previously ramping up EV subsidies and policies favoring domestic manufacturers, Tesla had an edge in the U.S. market. However, Trump’s new 25% tariffs on Canadian and Mexican imports—along with a potential trade battle with China—could pose serious challenges for Tesla’s supply chain and profitability.
China has been one of Tesla’s most important growth markets, with its Shanghai Gigafactory playing a crucial role in production and exports. But with China imposing retaliatory tariffs of up to 15% on select U.S. goods, Tesla could face increased costs on components sourced from the region. Additionally, competition from Chinese EV makers like BYD continues to intensify, potentially squeezing Tesla’s market share in China and other international markets.
Meanwhile, Tesla’s margins are already under pressure as it slashes vehicle prices to stay competitive. With tariffs threatening to push production costs even higher, investors need to consider whether the stock’s valuation still makes sense. Tesla has already lost more than 5% this week, and if trade tensions escalate, the downside risk could grow. For those who have been holding onto Tesla shares, now may be a good time to reassess, especially as the company faces economic headwinds beyond just tariffs—ranging from slowing EV demand to increasing competition from legacy automakers.
SoundHound AI (SOUN) – Too Much Hype, Not Enough Substance
SoundHound AI has been riding the AI wave, with shares skyrocketing 165% since Election Day. While excitement around artificial intelligence has fueled investor interest, the company has yet to prove it can translate its partnerships into sustainable profitability.
Recent deals with Torchy’s Tacos and Church’s Texas Chicken have given the stock a boost, but these agreements alone don’t justify the stock’s lofty valuation. Over the past 12 months, SoundHound generated just $67 million in revenue while posting a staggering $111 million net loss. At a price-to-sales ratio of 65, it’s priced like a company with explosive earnings growth—yet it remains deeply unprofitable.
For the rally to continue, SoundHound AI needs to demonstrate a clear path to profitability. Right now, investors are paying a premium for speculation rather than proven results. With AI stocks facing increased scrutiny, this could be a good time to take profits before reality catches up.
Ford Motor Company (F) – Rising Skepticism Ahead of Earnings
Ford’s stock has been climbing this month, but analysts are increasingly cautious about its outlook. While the company has reported strong U.S. vehicle sales, earnings expectations have been cut by more than 18% in the past three months, and its average price target has been revised down by over 19%. This signals growing concerns about Ford’s profitability heading into its next earnings report.
One of the biggest risks for Ford is rising inventory levels, which could put pressure on pricing and margins in the coming quarters. Much of Ford’s strength in 2024 came from inventory replenishment—a factor that won’t provide the same boost in 2025. Additionally, the company has faced analyst downgrades, including a recent cut from Barclays, which now rates the stock as equal weight and lowered its price target, citing structural challenges in the auto market.
While Ford has enjoyed a strong start to the year, the fundamentals are looking weaker. With declining earnings estimates, cautious analyst sentiment, and potential margin pressures, investors may want to reconsider their positions.
