Sell ​​Alert: Sell These 3 Stocks Before It’s Too Late Sell Alert: Sell These 3 Stocks Before It’s Too Late

While there are always risks involved in investing in the stock market, one way to mitigate potential losses is to select stocks that are likely to underperform. Here, we focus on the core deficiencies of three companies that have been criticized for troubling operating and financial data. These companies have consistently struggled with declining revenues, rising overheads, and failure to achieve long-term profitability. For example, the first company on the list remains unprofitable despite a significant increase in revenues, with consistently negative adjusted EBITDA and net losses.

They are struggling to be operationally self-sufficient. Likewise, the other is struggling with a worrying decline in net sales and rising costs, highlighting inefficiencies that are limiting their ability to compete successfully. Likewise, the latest significant fleet impairment has led to negative profitability and cash flow problems, necessitating a planned fleet replacement to relieve financial pressure. Knowing the warning signs of these stocks could give investors looking to protect their portfolios a tactical advantage. Given the trio’s financial position and strategic decisions, it’s clear why selling these stocks is a smart move.

Open door (OPEN)

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Open door (NASDAQ:OPEN) is a digital real estate platform that buys and sells homes. In the first quarter of 2024, the company reported an adjusted EBITDA loss of $50 million. This was lower than previous quarters, but still negative. This continues a pattern where the company has struggled to turn a profit on an operating basis. In the first quarter, adjusted EBITDA margins were -4.2%. The company’s operations are not leading to a positive bottom line before interest, taxes, depreciation and amortization, despite increased revenues and attempts to control expenses.

As a result, Opendoor posted an adjusted net loss of $80 million. However, this is better than the higher losses in previous quarters (such as -$409 million in Q1 2023). However, it still highlights the difficulty of converting sales into profit. The negative adjusted EBITDA and net income suggest that Opendoor’s operations must remain financially independent. So the company’s significant borrowings and recent stock sales show that it relies on debt and leverage to support its expansion.

In short, Opendoor’s negative bottom line and dependence on external financing make the company a top pick on the list of stocks to sell.

GameStop (GME)

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GameStop (NYSE:GME) operates retail stores that sell video games and gaming merchandise. In the first quarter of 2024, the company’s net sales decreased while selling, general, and administrative (SG&A) expenses increased as a percentage of sales. This represents a major structural flaw that is hindering the company’s ability to expand rapidly. Compared to the first quarter of 2023, which generated net sales of $1.237 billion, net sales in the first quarter of 2024 were $0.882 billion. This loss of approximately 28.7% suggests that GameStop’s revenue generation has declined significantly.

In addition, such a decline suggests that it is difficult to maintain customer demand or compete successfully in the market. A decline in net sales in the retail business could make it more difficult to take on new projects, increase market share or diversify the product range. In addition, GameStop’s growth problems are exacerbated by the increase in selling and administrative expenses as a percentage of net sales. Selling and administrative expenses reached $295.1 million in the first quarter of 2024, or 33.5% of net sales.

Taken together, these factors point to inefficiencies and difficulties in maintaining competitiveness in the market, making GameStop an ideal candidate for selling shares.

Hertz (HTZ)

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hertz (NASDAQ:HTZ) is a car rental company. The company experienced a significant increase in car depreciation expenses in the first quarter of 2024. More specifically, vehicle depreciation increased by $588 million year-on-year. Projected future residual values ​​of cars decreased, and losses from the sale of internal combustion engine vehicles (ICE) Vehicles were the primary cause of this increase. Electric vehicles were a significant factor in this increase, causing a $119 increase in per unit depreciation when electric vehicles were offered for sale, reflecting the adverse impact of increased vehicle depreciation.

In fact, vehicle depreciation was a major factor in Hertz’s negative adjusted EBITDA of $567 million in the quarter, representing a margin of negative 27%. Hertz has launched a fleet renewal program to better match vehicle types to customer demand and reduce average vehicle capital expenditures. Over the next 18 to 24 months, this technique could reduce depreciation per unit (DPU) from current levels. Therefore, this approach could reduce it to below 300, thus minimizing overall depreciation costs.

In summary, Hertz is one of the strongest stocks to sell due to its ongoing financial difficulties and the need for a strategic renewal of its fleet.

At the time of publication, Yiannis Zourmpanos did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.