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…
Tesla (TSLA)
Tesla has had a rough start to 2025, and the headwinds are only getting stronger. The stock has dropped 30% year-to-date and is now down 42% from its all-time high in December. While some investors remain bullish on the company’s long-term potential, the reality is that Tesla is facing serious challenges in the near term—starting with the broader slowdown in the EV market.
The auto industry as a whole is under pressure, and Tesla is no exception. Demand for EVs is softening, especially in key markets like China, where price competition is heating up. Tesla has already cut prices multiple times to keep pace with competitors, squeezing its margins in the process. While the company is banking on a lower-priced EV model later this year to boost demand, that alone may not be enough to justify its current valuation.
And that valuation is a major red flag. Tesla trades at over 105 times earnings—an extremely high multiple, even by its own historical standards. For a company now facing slowing sales growth, increasing competition, and continued price pressures, that kind of premium is tough to justify.
While some have speculated that Elon Musk’s relationship with President Trump could be a tailwind, there’s little evidence that it will meaningfully impact Tesla’s fundamentals in the short term. The stock has already given back its election-related rally, and with the auto market looking weaker, investors should be cautious about expecting a rebound anytime soon. Given the current risks, stepping aside for now may be the smarter move.
Moderna (MRNA)
Moderna’s stock has been under pressure for months, and for good reason. The company remains heavily dependent on its COVID-19 vaccine, and with demand continuing to decline, its revenue is falling fast. In Q4 2024, Moderna posted a net loss of $1.1 billion, a dramatic reversal from a $217 million profit a year earlier. Revenue dropped 66% year-over-year to $966 million, well below the $2.81 billion it generated in the same quarter of 2023.
While the company is working to expand its mRNA pipeline beyond COVID vaccines, none of its other programs have reached profitability. Investors who bought into the long-term promise of mRNA technology are still waiting to see real results. Meanwhile, the company just took another hit, with reports that federal officials are reviewing a $590 million contract awarded to Moderna for developing a bird-flu vaccine. If that deal gets pulled or delayed, it could add even more pressure to an already struggling business.
With the stock already down 25% this year and 68% over the past 12 months, some investors may see Moderna as a bargain. But the reality is that without a major near-term catalyst, there’s little reason to believe a turnaround is imminent. Given the company’s steep losses, regulatory uncertainties, and the continued decline in COVID vaccine sales, investors may want to consider stepping aside before further downside materializes.
General Motors (GM)
General Motors (NYSE: GM) is flashing warning signs that suggest further downside ahead. The stock has already dropped 22% from its high on November 25, and now technical indicators point to a potential bearish reversal. Most notably, GM’s 150-day moving average has started to turn downward, a sign that long-term momentum is fading. When a stock loses key support levels like this, it often signals more downside to come.
Adding to the concerns, GM faces new headwinds from President Trump’s announcement of a 25% tariff on auto imports from Canada and Mexico. This presents a serious challenge for the automaker, given its significant manufacturing presence in both countries. Higher tariffs could squeeze margins, disrupt supply chains, and force GM to make difficult pricing decisions in an already competitive market. While automakers have been preparing for trade policy uncertainty, sudden policy shifts can create additional volatility for stocks like GM.
Recent insider selling is another red flag. While insider sales don’t always indicate trouble ahead, large sell-offs by company executives can suggest a lack of confidence in near-term performance. With shares already sliding and external pressures mounting, it’s worth questioning whether GM’s stock still offers the kind of upside investors are looking for.
Given the technical breakdown, policy risks, and insider activity, this may be the right time for investors to reassess their GM holdings. If the stock fails to hold key support levels, a move down to the $42 range looks increasingly likely.
