Blue-chip stocks are some of the most popular equities that you can buy. But that doesn’t mean you should buy them all. Sometimes, you need to scour your portfolio for blue-chip stocks to sell because they’re dragging you down.
Blue-chip stocks represent some of the world’s biggest and most financially stable companies. Typically, a blue-chip company is an acknowledged market leader, often churning out reliable earnings and even dividends consistently.
Reputation, financial stability and dividends, what’s not to like?
Unfortunately, even blue-chip stocks often go through some down periods for many reasons. Sometimes there are market pressures that affect the entire industry or sector. Other times a company is in a downturn because its competitors are outperforming.
You don’t want to keep blue-chip stocks to sell in your portfolio for long without careful consideration. Here are some names that are not performing well at the moment.
Intel (INTC)
I have some reservations about Intel (NASDAQ:INTC). The chip maker hopes to reestablish its position as a market leader by spending big on some European factories, including $33 billion on two chip-making plants in Germany.
That’s on top of plans to spend $4.6 billion on a semiconductor assembly and testing plant in Poland and $25 billion for a microchip factory in Israel.
The problem with this spending is that Intel is already an unprofitable company. It posted an earnings per share loss in the first quarter and analysts expect it to post an EPS loss of 4 cents for Q2.
It seems to be an unnecessary and expensive risk to get into the foundry business at this point, which is what puts it among the blue-chip stocks to sell. INTC stock has a “D” rating in the Portfolio Grader.
3M Company (MMM)
3M Company (NYSE:MMM) is a conglomerate that operates in various sectors, including healthcare, consumer goods, electronics and manufacturing.
It makes protective equipment, medical supplies, cleaning supplies and more.
The stock is down 15% this year as sales weakened in consumer markets such as consumer electronics and retail.
Revenue in the first quarter was down 9% from a year ago to $8.03 billion. Earnings per share of $1.76 was down 22% from the first quarter of 2022.
The company is laying off 8,500 workers to cut costs and is spinning off its healthcare business into a standalone company. But that’s a problematic decision, as the healthcare business is 3 M’s most profitable venture.
As a growth company, you can find better than MMM, which gets a “D” rating in the Portfolio Grader.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a blue-chip tech company that’s made a name for itself in manufacturing semiconductors and wireless telecommunications products.
But as tech companies go, Qualcomm has been a disappointment. The stock badly trails the tech-heavy Nasdaq composite, up 31% in 2023. Qualcomm is up only 19%, only after a recent bull run that helped make the performance respectable.
Earnings in the first quarter included revenue of $9.27 billion, down nearly 17% from a year ago. Earnings per share of $1.52 dropped 40% from the same period a year ago.
Qualcomm is trying to enter the artificial intelligence market. It’s working on powerful chips to manage AI applications on smartphones and other mobile devices.
But it’s far from the best AI play you can get on the market, and its AI argument isn’t strong enough to move the needle on its unattractive fundamentals.
QCOM stock has a “D” rating in the Portfolio Grader.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) is the bluest of the blue-chip beverage stocks. With products in more than 200 countries and territories, Coca-Cola is a household name with soft drinks, sports drinks, coffee and teas.
But it’s not been a great 2023 for KO stock so far. Coca-Cola is down more than 6% on the year. That’s not great considering the Dow Jones Industrial Average is up more than 3% over the same period.
Sales growth in the first quarter fell 5% from a year ago. The company’s revenue was up 4.6% thanks to some price inflationary-triggered price increases, but Coca-Cola can’t continue to raise prices just to offset slowing sales.
KO will need to pick up the sales volume to attract more investor interest, so keep an eye out for its second-quarter earnings report release on July 26. For now, however, KO stock has a “D” rating in the Portfolio Grader.
Walt Disney Co. (DIS)
I’m not thrilled that Walt Disney Co. (NYSE:DIS) makes this list of blue-chip stocks to sell simply because DIS is in my portfolio. But, low ratings in the Portfolio Grader aren’t to be taken lightly, so it’s time to look at Disney.
The stock’s had some challenging months with coronavirus shutdowns, a leadership change (Bob Iger is back in charge) and a public feud with Florida’s governor.
And the stock is suffering, down 18% since February and trading close to the lows it experienced in the spring of 2020 when Covid-19 emerged.
The company’s trying to put its house in order, but it’s painful for the House of Mouse. Its ESPN service is in the middle of some painful cost-cutting that affected a lot of popular on-air talent.
Disney is preparing analysts for what it calls “a moderation in demand” in its popular U.S. amusement parks.
Count me among those who want to see DIS turn things around and return to its winning ways. But Disney is flashing warning signs and has a “D” rating in the Portfolio Grader.
Target (TGT)
Minnesota-based Target (NYSE:TGT) is one of the most popular retailers, with more than 1,950 locations. But as a blue-chip stock, Target is waving red flags.
The stock is down 25% since February as it combats several problems. Revenue was roughly flat in the first quarter, but earnings per share dropped more than 6%.
Target is expecting more than $500 million in inventory shrink: shoplifting, employee theft and vendor fraud this year.
As discretionary sales are down across the board and inflation continues to be a problem, Target stock will be under pressure. TGT has a “D” rating in the Portfolio Grader.
Verizon Communications (VZ)
I’m largely worried about Verizon Communications (NYSE:VZ) because of its massive debt. The company is in a hole totaling $186.2 billion – a formidable number far exceeding its market cap of $147 billion.
Verizon got into this hole because it spent billions of dollars building its 5G network. It accomplished that mission, but it’s not done enough to convince customers to choose Verizon over other companies offering 5G.
Verizon actually reported losing 127,000 paying customers in the first quarter.
The company’s first-quarter earnings report disappointed because a decline in equipment revenue sales contributed to Verizon falling 2.2% short of consensus revenue. It brought in $32.9 billion, down 1.9% from a year ago.
Verizon has a good dividend of 7%, but I’m not convinced it’s safe with that debt load and a shrinking customer base. VZ stock has an “F” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in DIS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
