The Nasdaq continues to lead the three major stock indices and is currently near its all-time high. In fact, year-to-date, the Nasdaq is up 5%. That compares with a 4% gain in the benchmark S&P 500 index and a 1% increase in the blue-chip Dow Jones Industrial Average. Still, as well as the Nasdaq is doing, not every stock trading on the index is winning, creating a list of top Nasdaq stocks to sell now.
The Nasdaq continues to benefit from the fact that it has a large concentration of technology companies listed on its exchange. This has allowed the Nasdaq to benefit from the investor euphoria related to artificial intelligence (AI), as well as other areas of tech such as e-commerce and cybersecurity that are performing exceptionally well.
Again, with some stocks not performing up to par, here are just a few of the top Nasdaq stocks to sell.
Cadence Design Systems (CDNS)
Cadence Design Systems (NASDAQ:CDNS) provided some truly awful guidance with its just-released earnings print. The company, which makes microchip design software, managed to beat Wall Street forecasts with its fourth quarter 2023 financial results. However, its outlook for the current first quarter of 2024 was extremely weak. The company forecast revenue of $990 million to $1.01 billion, and a profit of $1.10 to $1.14 per share for the current quarter.
That outlook fell far short of Wall Street consensus estimates of $1.09 billion in revenue and profits of $1.37 a share. Management blamed the weak guidance on tough comparisons in its hardware business, saying they had an exceptionally strong first quarter a year ago due to a hardware backlog. Unfortunately, it’s a major miss for a company that many analysts and investors had expected to be a beneficiary of artificial intelligence (AI) demand.
Arm Holdings (ARM)
Microchip designer Arm Holdings (NASDAQ:ARM) nearly doubled since its earning report.
However, with that kind of meteoric rise, investors should expect a pullback in the near term. Even with better-than-expected earnings, and increased demand for AI, the stock has become a bit overheated.
ARM stock has now nearly tripled since the company’s initial public offering (IPO) last September, and its market capitalization now rivals that of fellow chipmaker Intel (NASDAQ:INTC). Arm’s chips are found in nearly every type of smartphone and many personal computers (PCs), and the company sees a big catalyst in AI. However, anytime a stock runs this hot, a pullback can be expected.
We also have to factor in that in March, the 180-day post-IPO lock-up period on ARM stock expires, allowing insiders to sell their shares in the company and take profits. This includes Japanese holding company Softbank, which has a 90% stake in Arm Holdings.
Canopy Growth (CGC)
Cannabis producer Canopy Growth (NASDAQ:CGC) delivered another monster loss. The company just reported a net loss of $216.8 million as part of its latest financial results. The loss for the quarter ended Dec. 31, 2023, builds on a net loss of $264.4 million a year earlier. Canopy Growth tried to spin the results, saying that the loss equated to $2.62 per share versus a loss of $5.34 per share a year earlier.
However, the per share loss improvement was due to Canopy Growth issuing more stock over the last 12 months, diluting existing shareholders in the process. Revenue for what was the company’s fiscal third quarter continued to steadily decline, totaling $78.5 million, down 8% from $84.9 million a year earlier. Canopy Growth continues to struggle with declining sales and a loss of market share. In recent months, the company sold its corporate headquarters and placed part of its business under creditor protection.
With CGC stock having lost 99% of its value in the last five years and the shares now trading on the penny stock league tables, there are rumors that a bankruptcy filing is not far off. This makes Canopy Growth one of the top Nasdaq stocks to sell immediately.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) reported a rare revenue miss with its fourth-quarter financial results.
The company, whose products include Lay’s chips and Mountain Dew, said that demand for its products weakened during Q4 2023, which included the year-end holidays, a time when its sales normally spike. Sales declined 0.5% year-over-year in Q4. Analysts were expecting a 1.4% sales increase in the October to December quarter.
PepsiCo blamed the revenue drop on consumers responding to higher prices at the grocery store, saying that people are seeking out cheaper generic versions of its products. If true, then PepsiCo may have exhausted its pricing power, which is the ability to raise prices without losing customers. There are also concerns about the impact that the new class of weight loss drugs will have on PepsiCo moving forward. All of this is weighing on PEP stock, which is down 6% over the last 12 months. PEP is also one of the top Nasdaq stocks to sell at this time.
Peloton Interactive (PTON)
Peloton Interactive (NASDAQ:PTON) delivered Q4 2023 financial results and forward guidance that were bad. So bad that it sent PTON stock down 24% in a single day of trading.
What spooked investors was management warning of widening losses this year as the maker of internet-connected treadmills and stationary bikes struggles to execute its post-pandemic turnaround strategy. With its share price down 67% over the last 12 months, there are worries about Peloton’s ability to continue as a going concern.
Peloton guided for a loss in the current first quarter of between $20 million and $30 million. Analysts had expected a loss of $2 million. Peloton had been focusing on trying to grow monthly subscriptions for its online fitness classes. But management now says they’re struggling to grow paid app subscribers and see an uncertain macroeconomic outlook. The company says that it expects to return to revenue growth within a year. That’s little comfort to current shareholders, making PTON another one of the top Nasdaq stocks to sell today.
Paramount Global (PARA)
Paramount Global (NASDAQ:PARA) is another company that has been down on its luck for a longtime. The latest news out of the company is that it’s laying off 800 employees a day after the Super Bowl delivered it the highest ratings in television history. The layoffs come weeks after media entrepreneur Byron Allen offered to buy Paramount Global for $30 billion, including the company’s debt. Excluding debt, Allen has offered $14.3 billion to buy all of the outstanding shares of Paramount Global.
Paramount Global let it be known last fall that it was open to a sale after years of grappling with declines in its traditional TV networks and mounting losses from its streaming venture. There’s speculation that Byron Allen would take the entertainment company private if his acquisition is successful. Paramount Global owns the Paramount Pictures film and television studio, CBS television network, specialty TV stations such as BET, MTV, Nickelodeon and Comedy Central, as well as Paramount+ streaming service.
PARA stock has been in long-term decline. In the last 12 months, the company’s share price has fallen 42%. Over five years, the stock is down 74%, making it a Nasdaq stock to sell in February 2024.
Starbucks (SBUX)
Coffee chain Starbucks (NASDAQ:SBUX) issued Q4 2023 results that missed Wall Street forecasts across the board as its domestic and international sales each declined. The company reported earnings per share (EPS) of 90 cents versus 93 cents that was expected among analysts. Revenue in the final quarter of last year totaled $9.43 billion, which fell short of the $9.59 billion that was forecast on Wall Street. The poor results were blamed on a boycott of Starbucks in the U.S. and increased competition overseas.
Global same-store sales at Starbucks increased 5% in Q4 2023, though that figure missed analyst estimates of 7.2%. Starbucks has faced a backlash from conservative consumers in recent months over perceptions that it supports Palestinians in the current war between Israel and Hamas. China, the company’s second-largest market, also disappointed, with the cost of the average item purchased at Starbucks in China falling 9%. Due to the poor results, Starbucks revised down its sales outlook.
SBUX stock has declined 14% in the last 12 months and is near a 52-week low.
On the date of publication, Joel Baglole 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.
