January 24, 2026
Every successful investor knows a painful truth: knowing when to sell is often more critical than knowing what to buy.
While financial media overwhelmingly focuses on buying opportunities, our research consistently identifies companies facing significant headwinds that merit serious consideration for selling. These aren’t just stocks underperforming the market; they’re businesses confronting structural challenges, deteriorating fundamentals, or carrying valuations disconnected from financial reality.
What you won’t find here: reactionary calls based on short-term price movements or headline volatility. Each company on this list has been thoroughly analyzed across multiple metrics that historically precede substantial declines.
Smart investors understand that portfolio management requires both addition and subtraction. Sometimes the best investment decision is to redeploy capital away from troubling positions before problems fully materialize in the share price.
This week’s watchlist highlights stocks showing critical weaknesses that demand immediate attention:
Kratos Defense & Security Solutions (KTOS)
Kratos Defense demonstrates how geopolitical tensions can instantly destroy momentum in defense stocks trading at wildly expensive valuations, with shares plummeting 12% this week despite remaining up 234% over the past year as the Greenland dispute between the United States and Europe raised concerns about potential European retaliation through reduced purchases of U.S. defense equipment. The upstart defense provider specializing in drones and hypersonic technology saw shares spiral from highs near $134 as European leaders threatened to stop buying American defense systems if the conflict escalated over the strategic Arctic island critical for missile defense positioning. While the dispute has been resolved for now, Kratos stock failed to fully recover from the selloff, suggesting investors recognize the valuation had become unsustainable even absent geopolitical disruptions.
The situation deteriorated further when Piper Sandler initiated coverage with a neutral rating and $99 price target on shares trading near $115, effectively delivering a downgrade from the investment community that cut off the stock’s price momentum. This analyst skepticism reflects recognition that Kratos trades at a price-to-sales ratio exceeding 14 times, dramatically higher than both its long-term average and the typical defense stock despite the company growing revenue 24% organically last quarter. While this growth rate substantially exceeds traditional defense contractors, the valuation multiple demands sustained hyper-growth that becomes increasingly difficult to achieve as revenue bases expand and comparisons become more challenging. The 22.16% gross margin provides reasonable profitability on contracts won, yet this operational performance cannot justify valuations more appropriate for high-margin software businesses than defense contractors operating in competitive bidding environments.
Trading at around $111 per share with a market capitalization of approximately $19 billion, Kratos carries a valuation assuming the company continues delivering growth rates supporting price-to-sales multiples triple those of established defense giants despite lacking the contract backlogs, political relationships, and operational scale that allow larger competitors to sustain predictable revenue streams. The stock’s 52-week range of $23.90 to $134.00 illustrates the speculative mania that drove valuations to levels completely disconnected from defense industry economics, with the recent decline representing only partial correction toward fundamentals. The combination of geopolitical risks threatening European defense sales, analyst price targets implying further downside from current levels, price-to-sales ratios exceeding 14 times despite being a hardware-intensive business, and valuations that remain wildly expensive even after a 12% weekly decline creates a situation where Kratos represents speculation on continued momentum rather than investment based on reasonable valuation metrics. For defense investors seeking exposure to next-generation technologies, Kratos exemplifies the dangers of paying any price for growth stories, with the stock remaining too expensive even after this week’s drawdown to justify establishing positions in a company whose valuation assumes flawless execution in an industry where program delays, cost overruns, and contract losses represent routine occurrences.
Planet Labs (PL)
Planet Labs exemplifies how insider selling following massive price appreciation can signal valuation concerns even when operational metrics appear strong, with shares falling approximately 10% this week as CFO Ashley Johnson sold $4 million worth of stock following a 487% surge over the past twelve months. The space economy company operates satellite fleets providing regular imaging services and reported seemingly fantastic quarterly results with revenue growing 33% year-over-year to $81 million while backlog exploded 216% to $734 million, demonstrating accelerating customer adoption across defense, civilian, and corporate use cases. The company even announced a research project with Alphabet to potentially build data centers in orbit, suggesting Planet Labs sits at the intersection of space technology and artificial intelligence infrastructure buildouts that have captured investor imagination.
Despite these operational achievements, the CFO’s $4 million stock sale sends a concerning signal to investors who have ridden shares from under $3 to nearly $31 over twelve months, with insider selling following such dramatic appreciation often indicating those with deepest knowledge of business prospects believe current valuations exceed reasonable fair values. The broader market volatility surrounding Greenland-focused tariff disputes broke momentum across speculative growth stocks, yet Planet Labs’ failure to recover alongside market stabilization suggests investors increasingly question whether the company’s market capitalization of approximately $8.5 billion can be justified by $81 million in quarterly revenue. The price-to-sales ratio of 28 times reflects expectations that Planet Labs will not only sustain 33% revenue growth rates but accelerate growth while eventually achieving profitability sufficient to justify current valuations, demanding near-perfect execution over extended timeframes.
Trading at around $27 per share with a market capitalization of approximately $8.5 billion, Planet Labs maintains a 57.95% gross margin demonstrating healthy unit economics when acquiring customers, yet the company remains unprofitable despite achieving meaningful revenue scale that should theoretically support positive earnings if the business model possesses inherent profitability. The stock’s 52-week range of $2.79 to $30.90 illustrates the extreme volatility characterizing speculative space companies where investor enthusiasm for technological possibilities drives valuations disconnected from near-term financial realities, with shares having increased over tenfold within a year based primarily on backlog growth rather than demonstrated ability to convert contracts into profitable operations. The combination of CFO insider selling following 487% appreciation, price-to-sales ratios of 28 times, persistent unprofitability despite $81 million quarterly revenue, and market capitalization exceeding $8 billion for a company generating approximately $324 million annually creates a situation where Planet Labs trades on hope that accelerating backlog will eventually translate to profits justifying current valuations. For space technology investors, Planet Labs represents the classic momentum play where impressive operational metrics around backlog growth mask the reality that even substantial contract wins cannot justify valuations assuming the company will somehow achieve profitability margins and sustained growth rates supporting 28 times sales multiples typically reserved for proven software businesses rather than capital-intensive satellite operators.
Solana (SOL)
Solana demonstrates how even technological advantages and positive ecosystem developments cannot protect cryptocurrencies from macro pressures and legal challenges, with the seventh-largest digital asset declining 11% over the past week posting one of the largest declines among mega-cap cryptocurrency counterparts. The week’s depressing performance stemmed primarily from ratcheted-up macro concerns about potential U.S. takeover of Greenland, new rhetoric surrounding possible tariffs across European allies tied to this bid, and building “sell U.S.” sentiment affecting fixed income and equity assets that inevitably impacts correlated risk assets like cryptocurrencies. As one of the top global powerhouses in the smart contract-enabled layer-1 network space and among the fastest and cheapest from a transaction standpoint, Solana’s technological advantages theoretically should provide some insulation from macro volatility, yet correlations with risk equities ensure the token participates fully in broad market selloffs regardless of protocol-specific developments.
The week brought mixed news flow with positive catalysts including announcements from traditional finance players that key stocks like Nvidia and Microsoft could be traded on Solana via Ondo Finance through tokenization trends, demonstrating mainstream adoption of the network for real-world asset trading. However, these positive developments were overwhelmed by news that key Solana meme coin Pump.fun has been named in a class action lawsuit that reportedly affects other entities within the Solana ecosystem including the Solana Foundation, the parent organization driving innovation and development that Solana investors depend upon for continued protocol improvements. This legal exposure creates uncertainty about whether regulatory challenges could impair the foundation’s ability to support ecosystem development or whether settlements could consume resources better deployed toward technological advancement.
Trading at around $127 with a market capitalization of approximately $72 billion, Solana maintains positioning as a leading smart contract platform yet faces a combination of macro headwinds and ecosystem-specific legal challenges that create near-term uncertainty about price appreciation prospects. The stock’s 52-week range of $96.70 to $270.27 illustrates the extreme volatility inherent in cryptocurrency investments where sentiment can shift dramatically based on macro developments, regulatory actions, and ecosystem controversies, with current prices having declined over 50% from recent highs as enthusiasm around tokenization and AI data center partnerships proves insufficient to offset concerns. The double-digit weekly decline despite positive news around traditional finance adoption and tokenization of major equities suggests negative developments far outweigh positives, with the class action lawsuit potentially creating extended legal overhang that prevents the token from participating fully in any cryptocurrency sector recovery. For digital asset investors seeking smart contract platform exposure, Solana’s combination of legal challenges affecting core ecosystem entities, correlation with risk equities ensuring participation in macro selloffs, and failure to hold gains despite positive fundamental developments creates a situation where the token faces headwinds from multiple directions simultaneously, making near-term upside increasingly difficult to envision even for bulls who believe in the protocol’s long-term technological advantages.
