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…
Beyond Meat (BYND): Time to Consider Cutting Losses
Beyond Meat is navigating rough waters as it grapples with declining sales and a challenging financial outlook. Despite its initial burst onto the scene and early enthusiasm, BYND now finds itself in a precarious position with its market performance and position significantly weakened.
Looking ahead to 2024, Beyond Meat has set its revenue expectations between $315 million to $345 million. This forecast is part of a worrying trend, as the company’s revenues dipped from $465 million in 2021 to $343 million in 2023. The downturn is also evident in the company’s gross profit margins, which plummeted to -24% in 2023.
In response, Beyond Meat has made significant operational adjustments, including discontinuing its Beyond Meat Jerky product line, despite its previous success in the category. This strategic shift aims to refocus resources on potentially more profitable products.
While Beyond Meat’s management is working diligently to turn things around with improved product offerings and operational efficiency, the effectiveness of these strategies remains uncertain.
Sundial Growers (SNDL): Consider Offloading Amid Financial Strain
Sundial Growers, a player in the volatile cannabis industry, has been wrestling with profitability challenges and stiff competition. Despite a robust balance sheet featuring over $780 million in cash and marketable securities, SNDL’s financial activities raise concerns. The company reported a free cash outflow of $6.4 million in the first quarter, an improvement year-over-year but still indicative of ongoing cash burn.
Investors need to be wary of SNDL’s history of dilutive capital raises and its increasingly complex share structure, which includes multiple reverse splits. Currently trading below $2 and with a market cap under $500 million, the stock is susceptible to heightened risk and volatility.
Additionally, a sequential revenue decline from Q4 2023, attributed to seasonality in its Liquor and Cannabis Retail segments, further complicates its outlook. If consumer spending declines or if competition further intensifies, SNDL’s retail operations could face significant pressure.
Given these factors, SNDL appears as a prime candidate for risk-averse investors to consider selling, especially those concerned with financial stability and shareholder value erosion.
Boeing (BA): Navigating Turbulence with Caution Advised
Boeing is currently facing significant challenges, with its stock experiencing a sharp 29% decline this year. This downturn is largely due to escalating safety concerns that have shaken investor confidence. Notably, the incident involving an Alaska Airlines 737-9 earlier this year has led to the grounding of this model and triggered rigorous inspections by the Federal Aviation Administration (FAA), uncovering broader quality control issues. These findings have impeded production rates and delayed crucial certifications.
The financial repercussions for Boeing have been severe. In the first quarter of 2024, the company reported a disturbing net loss of $355 million, alongside a revenue decrease of $1.35 billion. Moreover, Boeing’s current forward PE ratio stands at an astounding 421x, far exceeding the industry average by over twenty times. This valuation is particularly concerning given the array of risks and the volatility it introduces, posing potential setbacks for investors.
Adding to Boeing’s woes is the recent guilty plea related to misleading authorities about the 737 MAX tragedies. This criminal conviction brings with it hefty sanctions and tarnishes Boeing’s reputation, complicating its path to recovery and raising substantial ethical concerns.
Given these factors, Boeing emerges as a critical stock to reconsider for those aiming to minimize risk and safeguard investments in an increasingly uncertain aerospace sector.
