This is no time for weakness in your portfolio, so looking for the week stocks to sell is critical.
The fourth quarter means that 2023 is nearly at an end. This is an ideal time to add winners to your portfolio to finish the year on a high note by separating them from stocks to sell.
The fourth quarter is a great time to invest in the stock market. The S&P 500 boasts an average return of 4.2% in the fourth quarter since 1950, which is much better than its returns for any other quarter.
To get that kind of return though, you have to know what names in your portfolio have the best chance to drag you down. You have to know which ones to hold, and you have to know which names are stocks to sell.
We’re using the Portfolio Grader to help identify the stocks to sell in the market. The Portfolio Grader looks at a stock’s earnings history, growth, momentum, analyst sentiment, dividend history and other factors. Then it assigns each stock an “A” through “F” grade.
Just like in school, you want to avoid getting those “F” scores. Here are seven weak stocks to sell now.
Pfizer (PFE)
Pfizer (NYSE:PFE) is a pharmaceutical company that’s a household name. Most people know it and partner BioNTech (NASDAQ:BNTX) was one of the first to develop a vaccine for Covid-19.
So you’d think that Pfizer has to be a good stock to keep in your portfolio, right?
Not so fast, as the saying goes, there are good reasons to add this to your list of stocks to sell.
Revenues this year are way down compared to a year ago because fewer people are looking for Covid-19 vaccinations and the federal government isn’t automatically purchasing them any longer.
And while Pfizer has plenty of other drugs in its pipeline, including a competitor to weight-loss treatment Ozempic, nobody is expecting to make up the revenue from Covid-19 vaccines or treatments.
That’s why analysts are projecting the company’s full-year earnings per share to drop from $5.47 per share a year ago to $3.29 per share in 2023.
PFZ stock is down 35% this year and gets an “F” rating in the Portfolio Grader.
American Tower Corp. (AMT)
American Tower Corp. (NYSE:AMT) is a real estate investment trust that owns and operates broadcast and wireless communications infrastructure. It operates in 25 countries and claims more than 226,000 towers.
REITs are excellent investments for income investors because the tax structure of a REIT requires it to return 90% of profits back to shareholders in the form of dividends. That’s why AMT’s dividend yield is close to 4%.
But there are problems here as well that make this one of the stocks to sell while you can. American Tower carries a lot of debt, nearly $39 billion at the end of the second quarter.
With interest rates continuing to rise as the Federal Reserve works to battle inflation, interest expenses are rising rapidly. Interest was $348 million in Q2, or 26% higher than a year ago.
Those interest rates also affect REITs in general because the yield is a little less attractive when you compare the payout to a government bond.
Because of the inflated interest rates, government bonds are going at better than 5% these days, and are safer investments than a REIT like American Tower whose stock dropped nearly 23% this year.
AMT stock gets an “F” rating in the Portfolio Grader.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) is an online payment transfer platform that lets users buy and sell goods, transfer money and essentially serve as an alternative to paper money.
PayPal also lets users buy and sell cryptocurrencies.
PayPal is the largest player in the online payment processing space, holding a 41% market share globally. It’s the closest thing you’ll find to a blue-chip stock for fintech.
But this isn’t a smart time to invest in PYPL stock. While shares topped $300 during the Covid-19 pandemic, the tumble has been steep and unforgiving. The stock is down 80% off its highs and 20% just this year.
PayPal suffers from exceptionally slow user growth. It had 431 million active accounts in the second quarter is only an increase of 2 million from a year ago. And it’s a drop from 433 million in Q1.
PayPal also suffers from a lack of free cash flow, attributable primarily to its attempts to grow its “buy now, pay later business.” PayPal currently has more than $1.9 billion in loans on its books. Free cash flow actually fell to negative $350 million in the second quarter.
This is a stock to stay away from for now. PYPL stock gets an “F” rating in the Portfolio Grader.
Estee Lauder (EL)
Estee Lauder (NYSE:EL) is a beauty company that sells hair care products, makeup, fragrances and skin care products. Unfortunately, there are plenty of blemishes with this stock, if you look closely.
Sales and revenue are down significantly from a year ago. For the 2023 fiscal year (ending June 30), sales of $15.91 billion were down a full 10% from a year ago, and net earnings of $1.01 billion were down from $2.39 billion in FY2022.
Estee Lauder attributes the fall-off to a steep 6% drop in travel in Asia, where Covid-19 shutdowns continued to linger.
The company says it projects a better 2024, but it’s still taking steps to mitigate damage in Asia by reducing inventories. The company suggests that the Asian market may not recover until 2025.
EL stock is down 43% in 2023 and it gets an “F” rating in the Portfolio Grader.
3M Company (MMM)
3M Company (NYSE:MMM) is a Minnesota-based conglomerate that makes protective equipment, cleaning products, home goods, roofing granules, medical supplies and other items.
But the company’s been a disappointment this year. In the second quarter, revenue of $8.3 billion was down 4% from a year ago.
The company also reported a GAAP loss of $12.35 per share, triggered primarily by a $10.3 billion settlement payable to public water suppliers to settle claims that the company polluted water with toxic chemicals.
But even putting aside that settlement, there are plenty of issues with 3M. Sales are guiding toward the low end of its guidance, indicating roughly a 3% decline for the year.
The company will have more to say about that later this month when it releases Q3 earnings. But considering that China’s economy continues to lag expectations, I’m not expecting a turnaround for 3M.
And finally, I’m not in favor of 3M’s plans to spin off its healthcare unit. The unit was responsible for 25% of 3M’s sales last year and is one of the company’s most profitable units.
All in all, 3M is deserving of its “F” rating in the Portfolio Grader.
Crown Castle (CCI)
Crown Castle (NYSE:CCI) is a REIT that works in the telecom space. Crown Castle has more than 40,000 cell towers, plus 85,000 miles of fiberoptic cable.
But headwinds in the telecom space are hurting CCI stock this year. As telecom companies slow their 5G rollout this year, companies like Crown Castle are most affected.
“As the carriers have reduced network spending, we expect lower tower activity for the rest of this year, resulting in lower contribution from services and a decrease to our full year 2023 outlook,” CEO Jay Brown said.
In addition, many telecom stocks are dealing with potential liabilities because they own lead-covered cables, a revelation that caused many analysts to downgrade their outlooks for the sector. Crown Castle’s 85,000 miles of cable fall into that category as well.
CCI stock is down 31% this year and gets an “F” rating in the Portfolio Grader.
Dominion Energy (D)
Dominion Energy (NYSE:D) is a utility company that distributes energy from power plants in Virginia, North Carolina, Connecticut and West Virginia. Overall, it supplies power to 7 million customers in 16 states.
The company is undergoing some changes, although it’s still a little unclear what it’s going to mean for shareholders. Dominion is making moves to get out of the natural gas business and is selling three distribution companies to Enbridge (NYSE:ENB) for $14 billion.
It also is continuing to promote clean fuel options, including a recent proposal for more than a dozen new solar projects for customers in Virginia.
The company announced more than a year ago that it’s starting a corporate review of its operations, but it’s still unclear exactly how getting out of the gas distribution business fits into the overall plan.
D stock is down 32% this year and it gets an “F” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
