Stocks To Sell

Mayday! Mayday! 3 Stocks Sinking Fast

Some big-name blue-chips are in a bit of a free-fall in recent sessions and are sinking stocks to avoid

It’s never a good feeling to be caught holding a firm’s shares in freefall, especially as the rest of the market continues rising. We’re in a rather healthy bull market, but the broad stock market rally has left some firms behind.

Indeed, selling in a state of heightened fear is almost always a poor idea, especially if you don’t think things through. If you intend to hold shares over many years, the occasional flop will tempt you to sell out of an entire position or, at the very least, do a bit of trimming.

When it comes to recent market laggards, investors should revisit the narrative and fundamentals to determine if anything has changed for the worse.

Sometimes, new negatives justify cutting one’s losses or taking what remains of our profits. Other times, it’s best to do nothing. Perhaps taking no action is the hardest thing to do in a market where you don’t need to look far for winners. Here are three sinking stocks to avoid.

Lululemon (LULU)

Lululemon (NASDAQ:LULU) shareholders are probably feeling the pinch of late, with the stock stretching to the downside by more than 7% during Wednesday’s session. At writing, LULU shares are now below $300, almost 42% below their all-time highs in the back half of December 2023.

It would be a massive understatement to say it’s been an awful 2024 for LULU stock. But is it too late to hit the sell button as the legging maker falls out of fashion with investors?

I don’t think it is. Earlier this week, a well-respected analyst at Jefferies, Randy Konik, had some pretty concerning things to say about Lululemon. He believes the business could crash next year. That’s a dire warning that I would not take lightly.

Though I’m no fashionista, I can’t say I want to be caught holding LULU stock as the athleisure trend faces its most critical test to date. I guess the trend is fading, perhaps in a way that could bring further ugliness in quarters ahead. Whether athleisure has faded for good remains to be seen; either way, I wouldn’t touch Lululemon as it falls face-first on the mat.

Target (TGT)

Retailing heavyweight Target (NYSE:TGT) dropped just over 8% on Wednesday, registering its fourth consecutive quarterly dip in comparable sales (down 3.7% for the May quarter). Indeed, Target is in a major slump right now, which could prove difficult to get out of without a drastic shift in consumer sentiment.

It’s quite concerning that other retailers have thrived in this environment as Target has fallen short. Despite the slump and another disappointing quarter for the books, TGT stock stands out as one of the best values in discretionary-leaning retail.

Of course, it’s unclear when Target can get revenues back on the growth track. Perhaps once consumers have more cash to splurge, they can on goods outside the grocery section. In any case, Target is lowering prices on around 5,000 items, which will weigh on margins but could help Target attract shoppers from its value-conscious retail rivals.

With a respectable 2.82% dividend yield and so much negativity already baked in, TGT stock looks like a fine contrarian buy while it’s down over 45% from its peak.

Intel (INTC)

Finally, we have chipmaker Intel (NASDAQ:INTC), which has been sinking rapidly lower since the year began. With big-name investors, such as Glenview Capital’s Larry Robbins, selling out of INTC stock in the first quarter, investors may be wondering if it’s a good idea to follow.

It’s not hard to see why investors are losing patience. The manufacturing division is expected to stay in the red until 2027. And for many, that’s just too long to wait for a rather expensive business to achieve breakeven.

Additionally, Intel’s rivals in AI chips could prove harder to catch as they advance their efforts. Given a lack of clarity as to when Intel stands to regain meaningful ground, I have to stay on the sidelines, even though I am tempted to nibble now that shares are beyond oversold, down around 38% from 52-week highs.

At 28.3 times trailing P/E, I’m not convinced INTC stock is cheap enough to catch on the way down.

On the date of publication, Joey Frenette did not hold (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.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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