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…
Walmart (WMT) – A Strong Business, But a Risky Stock at This Price
Walmart has delivered impressive returns over the past three years, significantly outperforming its retail peers. The company’s ability to capture market share, expand its e-commerce platform, and boost profitability has made it a favorite among investors. However, with the stock now trading at 1.1 times sales—well above its historical average of 0.75—the question is whether further upside is limited. Even strong businesses can become overvalued, and at this price, Walmart may already be pricing in much of its expected growth.
The company has raised its full-year outlook, suggesting confidence in its near-term momentum. But expectations are high, and with consumer spending under pressure, the upcoming February 20 earnings report will be a key test. If results disappoint or guidance is weaker than expected, the stock could see a pullback. Additionally, after two years of strong gains in the S&P 500, analysts warn that a market correction could be on the horizon. If that happens, premium-valued stocks like Walmart could be among the first to see selling pressure.
While Walmart remains a strong company with a dominant position in retail, the stock’s valuation looks stretched. Investors who have enjoyed the ride may want to consider taking profits, as the risk of near-term underperformance has increased.
ChargePoint (CHPT) – The Struggles Keep Piling Up
ChargePoint was once seen as a key player in the EV revolution, but its stock has collapsed from over $30 at its public debut to around $1 today. The company has struggled with slowing growth, mounting losses, and increasing competition from Tesla’s Supercharger network and EVgo’s fast-charging stations. Making matters worse, ChargePoint now expects revenue to decline between 17% and 19% in fiscal 2025, with analysts forecasting just $416 million in sales—well below previous expectations. A growth company losing revenue is a serious red flag.
ChargePoint remains deeply unprofitable, with a projected GAAP net loss of $270 million this year and negative adjusted EBITDA of $127 million. The company had previously set a goal of reaching EBITDA profitability by 2025, but that milestone has now been pushed back to at least 2027. At the same time, its transition from lower-margin Level 2 chargers to more competitive but lower-margin Level 3 DC chargers is squeezing profitability.
Another major concern is dilution. Since going public, ChargePoint has increased its share count by 59% to cover stock-based compensation and secondary offerings. More dilution is likely as the company continues to burn cash. With shrinking revenue, continued losses, and growing competition, ChargePoint is a stock to avoid.
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 before the company’s next earnings report.
