July 19, 2025
Every successful investor knows a painful truth: knowing when to sell is often more critical than knowing what to buy.
While financial media overwhelmingly focuses on buying opportunities, our research consistently identifies companies facing significant headwinds that merit serious consideration for selling. These aren’t just stocks underperforming the market; they’re businesses confronting structural challenges, deteriorating fundamentals, or carrying valuations disconnected from financial reality.
What you won’t find here: reactionary calls based on short-term price movements or headline volatility. Each company on this list has been thoroughly analyzed across multiple metrics that historically precede substantial declines.
Smart investors understand that portfolio management requires both addition and subtraction. Sometimes the best investment decision is to redeploy capital away from troubling positions before problems fully materialize in the share price.
This week’s watchlist highlights stocks showing critical weaknesses that demand immediate attention:
Plug Power (PLUG)
Plug Power represents a classic example of how speculative rallies can mask fundamental deterioration and create false hope for investors in structurally challenged businesses. Despite a dramatic 69% surge in June that captured headlines, the hydrogen fuel cell company still finished the first half of 2025 down 30%, and the underlying business metrics remain deeply troubling. The company’s gross margin has actually worsened to negative 84.03%, meaning Plug Power loses more than $1.80 for every dollar of revenue generated. This catastrophic margin profile, combined with 2024’s staggering $2.1 billion net loss and nearly halved revenue, reveals a business model fundamentally disconnected from economic reality.
The political and regulatory environment facing Plug Power has become increasingly hostile, creating additional headwinds that could prove insurmountable. President Trump’s executive order halting federal funding for green hydrogen projects previously approved by the Biden administration directly threatens the company’s $1.66 billion loan guarantee, which was crucial for addressing severe cash flow constraints. While the One Big Beautiful Bill Act provided some reprieve by extending tax credit phase-outs until 2027, this merely delays rather than solves the company’s dependence on government subsidies for viability. The recent deals with Allied Green Ammonia, while generating positive headlines, don’t address the core profitability crisis.
At $1.74 per share with a $2 billion market capitalization, Plug Power trades at astronomical multiples to any meaningful financial metric, effectively pricing in a miraculous turnaround that historical performance suggests is unlikely. The stock’s extreme volatility and high trading volume indicate speculative rather than institutional interest, while management’s ongoing “going concern” warnings highlight the severity of the financial situation. Even the recent CFO share purchases and hydrogen supply agreements cannot offset the mathematical reality that negative 84% gross margins are unsustainable regardless of external deals. For investors still holding positions, the combination of deteriorating fundamentals, political headwinds, and potential delisting risk creates a compelling case for immediate exit before the next inevitable leg down materializes.
Pegasystems (PEGA)
Pegasystems faces an extraordinary legal and reputational crisis that has prompted even traditionally patient institutional investors to abandon ship after a 14-year investment period. The software company’s ongoing legal battle with competitor Appian has evolved from a business dispute into a fundamental question about corporate governance and ethical business practices. The Virginia Supreme Court’s agreement to review the case in March 2025 brings renewed focus to the $2.036 billion judgment initially awarded to Appian in 2022 for alleged violations of the Virginia Computer Crimes Act, including accusations that Pegasystems improperly accessed Appian’s intellectual property and trade secrets.
The financial implications of this legal uncertainty extend far beyond the potential judgment amount to encompass broader questions about the company’s competitive positioning and management credibility. While an appeals court overruled the 2022 verdict, the Supreme Court review creates indefinite uncertainty that makes valuation modeling essentially impossible. Even if the company ultimately prevails, the reputational damage from accusations of corporate espionage and intellectual property theft could severely impact customer relationships and employee recruitment in the highly competitive software industry. The case has dragged on for years with no clear resolution timeline, creating a persistent overhang that has contributed to the stock’s significant underperformance versus the S&P 500.
Despite seemingly positive fundamentals including founder Alan Trefler’s continued 46.8% ownership stake and the company’s diversified software portfolio spanning CRM, RPA, and low-code platforms, institutional investors have concluded that better opportunities exist elsewhere. The combination of legal uncertainty, reputational risk, and opportunity cost has created a situation where even sophisticated long-term investors are choosing to redeploy capital rather than await resolution. For remaining shareholders, the Supreme Court review process could extend uncertainty for additional years, during which the software industry will continue evolving rapidly around AI and automation themes that Pegasystems may struggle to capitalize on while distracted by legal proceedings. The institutional selling recommendation after 14 years suggests professional investors have lost confidence in management’s ability to deliver superior returns given these persistent headwinds.
Becton Dickinson (BDX)
Becton Dickinson exemplifies how serial value-destructive acquisitions can permanently impair a previously successful company’s competitive position and shareholder returns. The medical device company’s dramatic decline can be traced directly to two catastrophic deals: the 2015 acquisition of CareFusion for $12.5 billion and the 2017 purchase of Bard for $25 billion. These transactions, which increased invested capital by 134% and 109% respectively, have systematically destroyed the company’s return on invested capital from the mid-teens to the mid-single digits while failing to generate the promised synergies that justified their enormous cost.
The financial devastation from these acquisitions has proven both persistent and seemingly irreversible under current management. Despite promises of “strategic plug-in acquisitions” moving forward, the CareFusion integration difficulties apparently taught management nothing, as they proceeded with the even larger Bard transaction just two years later. The result has been a complete collapse in operational efficiency, with net operating profit after tax (NOPAT) margins declining at the time of acquisitions and never recovering to previous levels. Most damaging is the complete stagnation in NOPAT growth, which has remained flat at $1.8 billion since 2021 despite the massive capital deployed.
At current valuation levels offering just a 2% NOPAT yield with no growth prospects, Becton Dickinson provides no compelling investment rationale even for income-focused investors. The combination of destroyed returns, stagnant growth, and ongoing regulatory challenges – including a December 2024 SEC settlement over allegedly misleading investors about Alaris infusion pump risks – creates multiple headwinds with no clear catalysts for improvement. While current CEO Thomas Polen and CFO Chris DelOrefice cannot be blamed for their predecessors’ acquisition mistakes, they have failed to demonstrate any ability to revitalize growth or restore operational efficiency. For shareholders who have endured 42% total returns over eight years compared to the S&P 500’s 199% return in the same period, the mathematical case for continued holding has evaporated. The institutional recommendation to sell after years of underperformance reflects recognition that capital preservation and redeployment to higher-returning opportunities represents the optimal strategy for remaining shareholders.
Bottom Line
This week’s featured companies demonstrate how different types of corporate failures can persist for years while destroying shareholder value through distinct but equally problematic mechanisms. Plug Power’s fundamental business model remains economically unviable despite speculative rallies, Pegasystems faces indefinite legal uncertainty that makes investment analysis impossible, and Becton Dickinson’s serial acquisition mistakes have permanently impaired returns with no clear path to recovery. In each case, the mathematical realities of negative margins, legal overhang, or destroyed capital efficiency have overwhelmed any positive narratives or short-term catalysts. For prudent investors, these situations highlight the importance of recognizing when companies face structural rather than cyclical challenges that patient capital cannot reasonably expect to overcome through management execution or market conditions alone.
