Identifying the worst-performing stocks in the current market can be challenging.
Balancing long-term growth and short-term financial issues is daunting.
We are entering a traditionally softer period for equities, particularly between May and October. Maybe this situation ought to prompt investors to consider stocks to sell now. Seasonal weakness plus economic headwinds could lead to cynicism.
Yet, amidst this complexity, analyst downgrades could offer valuable insights. They may highlight potential stocks to avoid or help identify overvalued ones.
Investors must heed these downgrades about stocks they own or consider for their portfolios. It is, however, essential to emphasize that this doesn’t imply dumping your winners or those stocks poised for potential growth. That said, let’s look at three stocks worth selling at this time.
| AMC | AMC Entertainment | $5.15 |
| COIN | Coinbase | $59.56 |
| NDLS | Noodles & Company | $3.34 |
AMC Entertainment (AMC)
AMC Entertainment (NYSE:AMC) is currently stealing the spotlight, albeit for the wrong reasons. Despite improving foot traffic, it’s crucial to consider AMC’s financial health before buying into the hype. Perhaps one of its biggest problems is AMC’s mammoth long-term debt load of $4.9 billion.
AMC’s strategy to bolster its financials is to increase its already massive debt pile and shareholder dilution. The recent $400 million private sale of its senior secured notes underscore the trend.
Therefore, avoiding this high-risk meme stock might be a prudent move.
In the first quarter of 2023, AMC’s cash burn soared to 21.5%, with cash reserves dropping to $495.6 million. Moreover, the lack of profitability for the past several quarters signals a tumultuous road ahead.
Wall Street analysts have assigned the stock a consensus “Sell” rating. Analysts expect more than a 50% downside from its current price targets.
Coinbase (COIN)
A storm appears to be brewing on the horizon for the leading crypto platform Coinbase (NASDAQ:COIN). A potential SEC enforcement action could dampen its operations. Its core trading functions, interest-bearing service, institutional trading solution, and custody business are under the regulatory microscope.
In the wake of this uncertainty, TD Cowen has effectively sounded the alarm, highlighting that multiple facets of Coinbase’s business that could come under SEC action. Hence, in these uncertain times, it pays to exercise caution and closely monitor the unfolding developments.
With more gloom and doom expected on the horizon, things will only worsen for Coinbase. The firm’s sales have dipped by double-digit margins in the past five quarters. COIN stock is down more than 16% in the past year, compared to the S&P 500’s 7% increase.
Noodles & Company (NDLS)
Noodles & Company (NASDAQ:NDLS) is known for its diverse culinary offerings, from mac and cheese to zoodles, seeing massive turbulence in recent years.
Adding to this less-than-rosy picture, NDLS stock tumbled 15% after the announcement of CFO Carl Lukach’s impending departure. The same day, the company grappled with a downgrade from Stephens Research. The analysts cited the CFO’s exit and waning traffic as key concerns highlighted in the recent earnings results.
In this unfolding saga, it’s perhaps best for investors to avoid wagering on NDLS stock, at least for the foreseeable future. Moreover, the stock attracts a sell rating from Quant.
On the publication date, Muslim Farooque did not have (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