The Nasdaq hit a new record high again on Tuesday. It has investors wondering which Nasdaq stocks to sell to lock in profits before the upside runs its course.
Many tech stocks have seen large gains from increased interest in artificial intelligence, pushing their valuations to levels that could be considered overbought. However, this has now led some to worry that a short-term pullback may occur. As a standard practice, few investors may preemptively take some money off the table ahead of a market correction.
Even without a short-term correction, most analysts are less optimistic about overall market returns this year. The benchmark S&P 500 is expected to see modest increases at best for the rest of the year. The Nasdaq, already at an alarming distance from reaching overbought levels on its daily Relative Strength Indicator, may have limited additional upside. Both economists and technical signals suggest the markets are nearing a top.
Therefore, now is a good time for investors to review which Nasdaq stocks to sell that have peaked or are close to highs. The following three may be worth selling before their share prices decline.
Moderna (MRNA)
The biotechnology company Moderna (NASDAQ:MRNA) is one of the first notable Nasdaq stocks to sell on this list. The MRNA stock rose to prominence during the Covid-19 pandemic due to the development of its mRNA vaccine.
While it is up over 32% year-to-date in 2024, the increase follows Q1 earnings showing less negative impact from declining Covid-19 vaccine sales, which have dropped by over 90% in 2023.
Moderna remains unprofitable, despite generating billions in annual revenue. As of March 31, profit margins stood at -115.82% and EPS at -$15.59, with quarterly revenues 91% lower.
The approval of an mRNA vaccine for Respiratory Syncytial Virus over the next few days becomes all more important for its future. While it could drive growth if approved, Moderna shares may plummet if it is not.
Insider MRNA share selling by Moderna’s President Stephen Hoge also signals potential concerns. Along with analyst forecasts of deeper losses this year, Moderna appears risky and is one of the Nasdaq stocks to sell.
Constellation Energy (CEG)
Constellation Energy (NASDAQ:CEG) might be the odd one out of the Nasdaq stocks to sell for some. The CEG stock price is up over 92% YTD, making it one of the best performers on the Nasdaq. However, considering negative quarterly revenue growth, its price may now be overextended.
Investors have generally favored companies providing green energy sources to fuel AI growth. As the largest producer of carbon-free energy in the United States, Constellation saw increased demand for its services to power servers that support AI.
While adjusted EPS more than doubled in CEG’s recent earnings, thanks to lower fuel costs, electricity prices last year were unusually low and not expected to decline further. The company will probably not see as strong earnings growth over at least the current quarter.
With a high price-to-earnings, or P/E, ratio of 30x compared to the industry average of 13.2x, CEG shares may be worth selling.
CrowdStrike (CRWD)
CrowdStrike (NASDAQ:CRWD) is the final pick of the Nasdaq stocks to sell in the near future. The cybersecurity company has seen strong growth this year, with its stock price rising almost 42% since the beginning of 2024. However, CrowdStrike barely made any profits, despite beating EPS estimates last quarter.
The CRWD stock is vulnerable to a selloff, as its 14-day RSI of 64 indicates it has overextended about 20% above industry average levels. Combined with a P/E ratio of 920x, well above any standards, CRWD shares appear highly overvalued.
The company is set to report earnings next week, which could provide an opportunity to reach a peak performance before investors take profits. This assumes it meets or beats analyst EPS estimates of $0.21 in profits. This will be a challenging benchmark, because it only reported $0.03 EPS for the same period last year.
On the date of publication, Stavros Tousios 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.
