The right stocks can make you rich and change your life.
The wrong stocks, though… They can do a whole lot more than just “underperform.” If only! They can eviscerate your wealth, bleeding out your hard-won profits.
They’re pure portfolio poison.
Surprisingly, not many investors want to talk about this. You certainly don’t hear about the danger in the mainstream media – until it’s too late.
That’s not to suggest they’re obscure companies – some of the “toxic stocks” I’m going to name for you are in fact regularly in the headlines for other reasons, often in glowing terms.
I’m going to run down the list and give you the chance to learn the names of three companies I think everyone should own instead.
But first, if you own any or all of these “toxic stocks,” sell them today…
Shopify (SHOP)
Shopify’s been rolling with the punches, but let’s face it, the home shopping spree of 2021 has taken a bow. The road to more growth is looking like an uphill battle compared to the cozy stay-at-home bonanza. And with SHOP transitioning into its mature phase, that eye-popping 90 times forward P/E ratio is kind of a head-scratcher.
So, if you’re looking to keep the pep in your portfolio’s step, it might be time to play it cool with Shopify. The e-commerce bash might just be simmering down, and a savvy exit could be your next smart move.
Wingstop (WING)
Wingstop has soared both stateside and across the globe through its franchise hustle. But the wing wonder seems to be hitting some turbulence. The inflation gremlin is nibbling on consumer wallets, and with the wellness wave ushering in weight loss drugs, many food stocks are getting the cold shoulder. While Wingstop dodged that bullet, the cooling fervor for delivery-centric munchies could mean a flock of in-store dining rivals pecking at its market share.
Now, Wingstop has been a savory success, no doubt. But with a price tag of a zesty 80 times forward earnings, it’s like a hot wing that might just be too hot to handle if recession winds blow through. It might be a prudent move to let this wing fly from your nest before the market appetite for high valuations gets a case of the hiccups.
Novavax (NVAX)
While vaccine stocks like Pfizer and Moderna may rekindle post their vaccine victory lap, the outlook for Novavax seems less likely to do so.
The tale of its vaccine candidate, Nuvaxovid, isn’t one for the books—missing the U.S. regulatory boat led to a financial fumble in 2021 and 2022. Now, although Nuvaxovid has finally got the nod for an updated version stateside, it feels like the party’s over and Novavax is just arriving.
With a cash burn cruising in the hundreds of millions each quarter and red ink expected to continue flowing, stability seems like a distant shore for NVAX stock. Having nose-dived from over $300 to around $6.50 per share, a dip into the low single-digits territory might just be on the horizon.
Novavax’s journey feels akin to arriving fashionably late to a soiree—the buzz has dwindled and the guests have moved on. It might be prudent to reconsider if NVAX still deserves a RSVP in your portfolio. As the saying goes, timing is everything, and Novavax’s tardy ticket to the vaccine venue might just be a cue to bid adieu.
