Three Stocks to Sell Next Week

Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance.  

Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week. 

Carvana (CVNA) 

Used car prices skyrocketed coming out of the pandemic. However, it looks like the used car market is entering a correction, with some analysts calling for an impending collapse. The Manheim Used Vehicle Value Index showed that used car prices sank 14.9% year-over-year in December 2022, the largest annualized price decline in the 26-year history of that index.

Due to the steep decline in used car prices, Carvana (CVNA) stock has lost 95% of its value over the last 12 months. The company’s profit per vehicle was lower by 25% in 2022. Meanwhile, its total debt stands at $9.25 billion, with only $650 million of cash on hand. There have also been confirmed media reports that the company’s creditors have signed an agreement on handling negotiations with Carvana if it goes bankrupt. That’s not a good sign.

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Opendoor Technologies (OPEN)

Opendoor Technologies (OPEN) aims to revolutionize the home-buying process with its automated solution for a smoother, quicker, and more convenient buying experience. Investors piled into OPEN during its market debut in 2020. However, OPEN stock has lost nearly 80% of its value over the past year, with expectations building that more pain could be on the horizon due to the widespread decline in the real estate market. 

Redfin anticipates that there will be a 16% year-over-year decline in the number of existing home sales in 2023, making OPEN an ideal stock to sell.    

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Northrup Grumman (NOC)

A senior Ukrainian official recently suggested that Vladimir Putin could be forced out of power within months. If that happens, Moscow would likely have difficulty sustaining the attacks, and the war in Ukraine would probably end.

With Putin seemingly on his way out, aerospace and defense technology company Northrup Grumman (NOC) could be hurt by defense budget cuts. The company has benefitted from supplying its “Bushmaster automatic cannons and midsized ammunition” and its “RQ-4 Global Hawk aircraft” to the Ukrainians. If the war winds down,  orders of those products are likely to drop significantly. Northrop also faces margin pressure from cost input inflation and free cash flow pressure from the R&D cash tax input.

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