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…
Boeing (BA) Tax Loss Selling Pressures and Ongoing Struggles
As the end of the year approaches, investors are reviewing their portfolios to balance gains and losses. Tax-loss selling is a popular strategy that allows investors to offset capital gains by selling stocks that have underperformed. With the broader market up over 20% in 2024, many investors are looking to dump underperformers to reduce their tax bills. October is a key time for this as we move toward the year’s final quarter.
Boeing (NYSE: BA) has had a rough 2024, with shares down over 40% year-to-date, making it a prime candidate for tax-loss harvesting as investors look to offset gains elsewhere in their portfolios. This significant drop comes as Boeing grapples with several challenges, including supply chain issues, production disruptions, and most recently, a machinist strike in the Seattle area that could further weigh on deliveries.
Despite ongoing demand in the aerospace sector, Boeing’s operational setbacks—like the 737 Max 9 door incident and delays in key programs like the 777X—have hampered its recovery. Bank of America analyst Ronald Epstein recently reiterated a neutral rating on the stock, lowering his price target to $170 from $200, citing concerns over potential cash burn and defense program inefficiencies.
With the broader market up for the year, Boeing’s continued weakness makes it a prime candidate for tax-loss selling pressure. Investors may consider taking a step back from Boeing, especially with the company’s road to recovery looking prolonged and uncertain.
Paramount Global (PARA) Facing Uncertainty Ahead of Earnings
With earnings season ramping up and Paramount Global set to report later this month, now might be the time to reconsider this stock. Despite a modest 4% gain over the last month, shares are still down around 29% in 2024, reflecting a turbulent year for the company. Paramount’s recent moves—like its upcoming merger with Skydance and a second phase of U.S. layoffs aimed at cutting $500 million in costs—signal a company in flux. Investors may see volatility around the upcoming earnings release as there is significant uncertainty around whether the company can meet expectations.
Given the failed merger talks with Warner Bros. Discovery earlier in the year and the subsequent 5% drop in July, there are concerns that Paramount may struggle to stabilize. Add to that the ongoing cyclical challenges facing the media industry, and this stock looks risky for anyone seeking stability during earnings season.
Another factor to consider is the market sentiment around the stock. While some analysts hold a neutral stance, 10 out of 27 analysts covering the stock maintain an underperform or sell rating, signaling caution. For those looking to trim their portfolios ahead of more volatility, Paramount could be a name to avoid as we head deeper into Q4.
Nordstrom (JWN) Uncertain Outlook Despite Takeover Offer
While Nordstrom has shown some positive momentum this year with shares up over 19%, recent developments raise red flags. The company is scheduled to report its earnings in November, but recent performance indicates it could face headwinds. In early September, Nordstrom’s founding family made an offer to take the retailer private at $23 per share, valuing the company at $3.8 billion. However, in the last month, Nordstrom’s stock has fallen more than 3%, raising questions about its near-term outlook.
The takeover bid might provide some short-term support, but long-term growth concerns remain. The broader retail sector is facing significant challenges, including rising inflation, shifting consumer spending, and increased competition. Analysts remain largely neutral on the stock, with 13 of the 19 analysts covering it issuing hold ratings. This cautious outlook and potential downside in the upcoming earnings report suggest Nordstrom is another stock to watch carefully—and possibly avoid—this season.
