February 21, 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:
Cogent Communications (CCOI)
Cogent Communications exemplifies a failed acquisition turned catastrophic value destruction, with shares plummeting as much as 33.8% before recovering slightly to a 27% decline following fourth-quarter results showing revenue falling 4.7% year-over-year to $240.5 million that missed analyst expectations of $243.7 million despite the company posting smaller-than-expected net losses of $0.64 per share versus consensus calling for $1.03. The multinational internet service provider faces existential challenges from the Sprint fiber network acquired in 2023 that continues hemorrhaging thousands of customers per quarter while the lucrative enterprise client base shrank 20% during 2025, creating a situation where the company operates in full turnaround mode hoping its recently launched Optical Wavelengths service can offset fleeing customers. The catastrophic 14.86% gross margin reveals a business generating virtually no profit on services sold, with EBITDA margins declining further as customer losses accelerate and revenue shrinks despite supposed operational improvements.
The Optical Wavelengths service that management touts as the foundation for recovery appears woefully inadequate given that the average Wavelength site has attracted only approximately two paying customers thus far, providing minimal revenue base from which to build meaningful growth while Sprint customers continue departing at rates measured in thousands per quarter. The revenue economics compound concerns, with quarterly revenues per Wavelength client running in thousands of dollars rather than millions, making it mathematically impossible for this nascent service to offset the massive customer losses afflicting the legacy Sprint fiber network and enterprise business. Cogent is running low on cash reserves while attempting this turnaround, creating a race against time where the company must somehow stabilize customer losses and achieve Wavelengths adoption at dramatically accelerated rates before depleting working capital necessary to fund operations during the extended restructuring period.
Trading at $18.59 per share at the time of writing with a market capitalization of approximately $913 million and offering an unsustainable 16.41% dividend yield that almost certainly faces elimination given cash constraints and mounting losses, Cogent trades at just 0.9 times sales reflecting investor recognition that the business model has fundamentally broken. The stock’s 52-week range of $15.96 to $80.45 illustrates the catastrophic 77% decline over the past year as the Sprint acquisition has proven disastrous, with shares now trading near the bottom of this range and threatening further declines as the turnaround narrative collapses under operational reality. For telecommunications investors, Cogent represents a falling knife rather than a promising rebound opportunity, with the combination of thousands of customers fleeing quarterly, EBITDA margins deteriorating, nascent Wavelengths service showing minimal traction with just two customers per site, enterprise clients shrinking 20% annually, and depleting cash reserves creating a situation where the company faces potential insolvency absent dramatic operational improvements that management has shown no capability of achieving despite operating in full turnaround mode for an extended period.
Palo Alto Networks (PANW)
Palo Alto Networks demonstrates how AI disruption fears can pressure even industry-leading cybersecurity companies, with shares declining 1.5% Friday as Anthropic PBC announced Claude Code Security—a new AI-powered feature that scans codebases to flag security vulnerabilities and suggest appropriate software patches. The privately held artificial intelligence developer released this capability as a “limited research preview” to enterprise and team clients while explicitly positioning the product against “legacy cybersecurity solutions,” writing that Claude Code Security was built for “allowing teams to find and fix security issues that traditional methods often miss.” This direct competitive challenge from a well-respected AI developer raises fundamental questions about whether cybersecurity represents an industry ripe for AI disruption or whether incumbent providers can successfully integrate similar capabilities to maintain competitive advantages.
The existential question facing Palo Alto Networks and traditional cybersecurity providers centers on whether AI-native solutions like Claude Code Security can deliver superior vulnerability detection and remediation recommendations compared to existing platforms that have incorporated AI capabilities for years, with the answer determining whether established players retain pricing power or face margin compression as AI tools commoditize security scanning and patch suggestion services. Claude models generally enjoy strong reputations in the market, suggesting the new cybersecurity feature will likely prove similarly useful, yet this doesn’t necessarily mean it will be disruptive enough to steal meaningful market share from incumbents who possess established customer relationships, integrated security platforms, and years of proprietary threat intelligence that AI models cannot easily replicate. The 73.50% gross margin demonstrates exceptional profitability when Palo Alto Networks successfully sells security solutions, yet these healthy economics prove vulnerable if AI tools from companies like Anthropic enable customers to achieve comparable security outcomes at substantially lower costs.
Trading at around $149 per share with a market capitalization of approximately $104 billion, Palo Alto Networks carries a valuation assuming the company maintains market leadership despite AI-powered competitors entering cybersecurity with potentially superior technology leveraging large language models trained on vast codebases. The stock’s 52-week range of $144.15 to $223.61 illustrates how dramatically sentiment has shifted as investors question whether cybersecurity represents a defensible moat or a business model vulnerable to AI disruption, with shares now trading closer to 52-week lows than highs as each new AI-powered security announcement triggers reassessment of incumbent valuations. While this represents a wait-and-see situation to determine whether Claude Code Security proves powerful enough to steal market share from established providers, the fundamental risk centers on AI’s potential to democratize cybersecurity capabilities that currently justify premium pricing, with companies like Anthropic potentially able to deliver comparable or superior vulnerability detection at costs substantially below what traditional providers charge. For cybersecurity investors, Palo Alto Networks faces the uncomfortable reality that even as an industry leader with excellent margins and strong customer relationships, the company cannot escape questions about whether AI represents enabling technology that incumbents successfully integrate or disruptive force that renders existing platforms increasingly obsolete as customers migrate to AI-native security solutions offering superior detection capabilities at lower costs.
EPAM Systems (EPAM)
EPAM Systems exemplifies how muted guidance can trigger severe selloffs even when companies beat expectations, with shares falling 16.4% for the week despite fourth-quarter revenue growing 12.8% to $1.41 billion and adjusted earnings per share increasing 14.8% to $3.26, both exceeding analyst estimates. The technology consulting firm’s superficially impressive growth rates mask concerning underlying trends, with organic revenue growth stripping out acquisition effects measuring just 5.6% in the fourth quarter and 4.9% for the full year, revealing that inorganic expansion through acquisitions accounts for most reported growth while the core business stagnates. Management’s 2026 guidance calling for total revenue growth between 4.5-7.5% with organic growth of 3-6% represents deceleration at the midpoint, fueling investor fears that AI may be putting pricing pressure on human consultants or enabling enterprises to reduce reliance on external services.
The NOERIS acquisition completed in late 2024 already shows signs of trouble, with management disclosing that the consulting subsidiary’s largest client is ramping down business with the company in a move that will detract approximately one full percentage point from EPAM’s 2026 growth rate. This admission raises fundamental questions about the quality of NOERIS’s customer relationships and whether EPAM overpaid for an asset whose largest revenue source was already preparing to exit when the deal closed, potentially indicating due diligence failures or desperation to achieve growth through acquisitions rather than organic business development. While management maintains they are not seeing pricing pressure from AI but rather that enterprises embarking on AI journeys are taking their time with IT plans and slowing deployment timelines, this explanation fails to address why organic growth has decelerated to mid-single digits for a consulting firm supposedly positioned to benefit from enterprise AI adoption.
Trading at around $139 per share with a market capitalization of approximately $7.7 billion and a 26.39% gross margin demonstrating modest profitability on consulting services, EPAM trades at approximately 11 times this year’s adjusted earnings guidance following the selloff—a valuation appearing superficially cheap yet reflecting legitimate concerns about whether AI will displace or pressure human consultants over coming years. The stock’s 52-week range of $128.78 to $222.53 illustrates the brutal revaluation afflicting consulting firms as investors weigh whether management teams accurately assess AI’s impact or whether companies face eventual disruption from technology that can perform services at dramatically lower costs than human consultants charge. Many consulting firms have recently sold off to similarly low valuations as the sector confronts existential questions about AI disruption, creating a situation where EPAM’s cheap multiple may represent genuine value if management correctly assesses minimal AI impact or a value trap if AI eventually replaces substantial portions of the work these companies perform. For technology services investors, EPAM represents the uncomfortable reality that even companies posting double-digit revenue growth and beating earnings expectations cannot command premium valuations when organic growth decelerates to mid-single digits, recent acquisitions show early signs of deterioration with major clients departing, and fundamental uncertainty exists about whether AI will enhance consulting businesses or render them increasingly obsolete over coming years.
