Blue-chip stocks continue to trail in this market. Through the first half of the year, the Dow Jones Industrial Average, which is comprised of 30 blue-chip stocks, is up 4% compared to a 20% gain in the technology loaded Nasdaq Composite index. Technology stocks, particularly the mega-cap names, continue to outperform at the expense of blue-chips.
There are many rock-solid blue-chip stocks that have delivered strong financial results, trade at cheap valuations, and are worthy of investor capital, but not every blue-chip stock. Some well-known companies are seeing their share prices trade at 52-week lows for good reason. Poor earnings, lowered guidance, and a loss of market share are seeing some blue-chip names plunge, and deservedly so.
Here are three blue-chip stocks to sell in July before they crash and burn.
Nike (NKE)
Anyone still holding onto shares of Nike (NYSE:NKE) might want to reconsider their position. The company’s stock just plunged 20% in one trading session after the sneaker and athletic apparel retailer posted poor quarterly financial results and lowered its full-year guidance. Nike stock is down 34% in the last 12 months and trading at a 52-week low, with no hope of recovery in sight.
The company reported EPS of $1.01 versus the 83 cents that was expected among analysts. Revenue for the company’s fiscal fourth quarter totaled $12.61 billion compared to $12.84 billion that was forecast and sales were down 2% from a year earlier. For all of fiscal 2024, Nike posted sales of $51.36 billion, which were flat compared to the previous year and the slowest pace of annual sales growth since 2010. Worse, Nike lowered its forward guidance.
The company said it expects sales to drop 10% for the just completed second quarter of the calendar year due to soft sales in China and what executives called “uneven consumer trends.” Nike previously expected sales to grow in its fiscal 2025 year. Sales in North America, Nike’s biggest market, came in at $5.28 billion in the just completed quarter, below forecasts of $5.45 billion. This bad news makes Nike a blue-chip stock to sell.
Walgreens Boots Alliance (WBA)
The only company that had a worse earnings print than Nike recently is Walgreens Boots Alliance (NASDAQ:WBA). The retail pharmacy chain’s stock fell 24% in a week after management delivered mixed financial results and lowered their forward guidance. Walgreens reported EPS of 63 cents, which missed consensus expectations that called for 68 cents. Revenue totaled $36.40 billion, which was ahead of forecasts of $35.94 billion. Sales increased 2.6% from the same period a year ago.
What really sunk Walgreens was its guidance. Company executives said they now expect full-year 2024 earnings of $2.80 to $2.95 per share. That new guidance is down from a previous outlook that called for earnings of $3.20 to $3.35 a share. Executives at the company said the lowered guidance reflects a “challenging environment” for pharmacies and consumers. Walgreens declined to provide a new revenue forecast for the fiscal year.
The latest disappointing print comes as Walgreens cuts costs amid weakening consumer demand. The company is in the midst of turnaround strategy that is focused on closing underperforming stores. In the last 12 months, this blue-chip stock to sell has declined 57% and is also near a 52-week low.
Levi Strauss & Co. (LEVI)
Demin, specifically blue jeans, are the hot fashion trend of 2024. Denim jeans, jackets, dresses and skirts are making a comeback with consumers and trending on social media. Influencers are peddling denim products all over the internet. Ironically, Levi Strauss & Co. (NYSE:LEVI) is not benefitting from the denim craze. The company, which is widely credited with inventing blue jeans back in 1853, has not enjoyed a sales uptick.
In fact, Levi just delivered a stinker of a quarter that sent its share price down 15% in a day. LEVI stock is now trading nearly 10% lower than where it was five years ago. This comes after the denim retailer reported EPS of 16 cents versus 11 cents that was expected among analysts. Revenue totaled $1.44 billion compared to $1.45 billion that was anticipated. The company blamed the miss on foreign exchange rates and weak sales of its Docker’s brand.
On a call with analysts and media, management reaffirmed their previous full-year guidance, which calls for earnings of $1.17 to $1.27 per share. That’s in line with Wall Street targets. Unfortunately, investors weren’t in a forgiving mood, making Levi Strauss a blue-chip stock to sell.
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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
