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…
Supermicro (NASDAQ: SMCI) Reporting Woes Create Too Much Uncertainty
Supermicro has been a key player in the AI space, benefiting from partnerships with Nvidia and other chip giants. However, the company is currently navigating serious challenges, including delays in financial reporting and the loss of its auditor. These issues have placed it at risk for a Nasdaq delisting, adding significant uncertainty to its outlook.
Although Supermicro has hired a new auditor and aims to get back on track, the damage has already taken a toll. The stock is down 28% since late August, and prominent investors like David Shaw have reduced their positions significantly. While the AI market offers long-term growth potential, the current lack of transparency and compliance concerns make this stock too risky to hold.
Until Supermicro resolves its reporting issues and regains investor confidence, it’s best to steer clear. There are better opportunities in the AI space with less baggage and greater near-term stability.
Walgreens Boots Alliance (NASDAQ: WBA) Too Many Risks, Too Few Catalysts
Walgreens Boots Alliance has had a brutal 2024, with its stock plunging 65%, making it the worst performer in the S&P 500 this year. The company is struggling on multiple fronts: it’s posted losses in three of the last four quarters, slashed its dividend earlier in the year, and faces intense competitive pressures from Amazon’s push into same-day prescription delivery.
Walgreens’ healthcare clinic strategy has also failed to deliver meaningful results, and there’s growing speculation it could be abandoned altogether. While new CEO Tim Wentworth may eventually outline a turnaround plan, there’s currently no clear path to profitability or long-term growth.
With too many risks and no near-term catalysts, Walgreens remains a stock to avoid. It’s tempting to view it as a contrarian opportunity, but until management can demonstrate a sustainable strategy, the outlook remains bleak.
Palantir Technologies (NYSE: PLTR) Overvalued After a Parabolic Run
Palantir Technologies has had an incredible run, with shares more than tripling over the past year and climbing 134% since September alone. While the company’s growth story is compelling—accelerating revenue, strong U.S. commercial and government business, and stellar margins—its valuation has reached sky-high levels.
Palantir currently trades at 64 times trailing-12-month revenue and 174 times free cash flow. Even if the company doubled its cash flow tomorrow, its valuation would still appear stretched. This pricing suggests that much of the optimism about its future growth is already baked in, leaving little margin for error.
Successful investing is about finding quality at a reasonable price, and right now, Palantir’s valuation makes it difficult to justify adding or holding the stock. While it’s tempting to ride the momentum, the stock’s history of volatility suggests there could be better buying opportunities down the line at more reasonable levels. For now, taking profits off the table seems like the prudent move.
