The October CPI report showed a lower-than-expected inflation rate, boosting the market sentiment and sparking a rally across various sectors. However, not all stocks are poised to benefit from positive macroeconomic news. Below are three risky stocks that investors should get rid of now before its too late.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a global provider of test systems for burning-in and testing logic, optical and memory integrated circuits. The equipment provider sells machines called FOX systems and these machines require consumables called WaferPak Contactors and DiePak Carriers. Together, the machines and consumables are designed for testing different types of chips.
AEHR’s recent earnings release beat Wall Street’s estimates, but the company did not raise guidance for its fiscal year 2024. This coupled with broader macro volatility, have precipitated in significant selling pressure. The macroeconomic environment is not looking very positive for EV makers, as many analysts predict demand will continue to slip in coming months. Such a trend could decelerate AEHR’s revenue growth and compress margins.
My suggestion would be to dump this risky stock before more selling pressure hits the company’s stock price.
MaxLinear (MXL)
MaxLinear (NASDAQ:MXL) is a fabless semiconductor company that designs and markets analog and mixed-signal integrated circuits for various applications, such as broadband communications, data center infrastructure, and industrial connectivity. In essence, the company’s chips are crucial to creating internet-of-things (IoT) connectivity devices.
However, MaxLinear company reported mixed results throughout 2023. The semiconductor company’s first, second, and third quarter results showed substantial declines in revenue from a year-over-year perspective. Macroeconomic headwinds, mainly faced by MaxLinear’s end-markets, which are primarily consumer-facing, are perhaps most to blame for the lackluster figures. MaxLinear’s shares have plummeted more than 48% since the start of the year. Investors still allocated to this stock should consider selling before more damage is inflicted.
Verint Systems (VRNT)
Verint Systems (NASDAQ:VRNT) is a software company that provides customer engagement and cyber intelligence solutions. The company’s main strategy has been to help brands by offering an AI-powered platform that enables customer experience (CX) automation through introducing automation and workflows that reduce operating costs.
The company reported disappointing results for the third quarter of 2023, with revenue decreasing by 6% year-over-year and adjusted earnings per share falling by 23%. The company also reduced its guidance for the full year, citing lower demand for its legacy products and slower adoption of its cloud-based offerings. With shares having already fallen more than 38% year-to-date coupled with the fact Verint’s business model isn’t overcoming the difficulties of the current business environment, I believe investors should consider abandoning this and the other risky stocks.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
