With just a month left before the final calendar quarter of 2023 begins, now may be a time to consider stocks to sell in Autumn. I know – it’s not the most pleasant of topics. As well, you’re going to want to apply caution with this fall stock clean-up list. It can be an astute warning or a clown show.
Still, I think there’s good reason to consider exiting stocks losing momentum in the fall. For one thing, the broader market performance has been rather choppy over the past month. Given that Federal Reserve Chair Jerome Powell acknowledged that there’s significant work to be done to tame inflation, more volatility may be on the horizon.
Second, it’s obvious that consumers are hurting. From the record credit card debt in the U.S. that exceeded $1 trillion to major retailers warning about fading consumer confidence, folks don’t need to look far for an excuse to red flag stocks to avoid in Autumn. Plus, we’ve had such a great run, which may mean it’s time for a correction. With that, below are end-of-summer stock sales to consider.
Peloton (PTON)
Forgive me for attacking the low-hanging fruit but I think it’s time to fade away from Peloton (NASDAQ:PTON). A few days ago, the exercise bike manufacturer released its results for its fiscal fourth quarter. While the print was mixed – missing against expected losses but beating analysts’ revenue target – management also admitted that the churn (attrition rate) associated with its bike recall was greater than anticipated.
But does a mixed earnings print and some bad news warrant inclusion on a list of stocks to sell in Autumn? Yes, it does, especially if the ones selling are the insiders. Before you send me hate mail, you should realize that per Fintel data, the number of insider purchases of PTON stock amounted to 102 transactions. However, the number of sales clocked in at 711.
Plus, the most recent insider buy occurred on May 25, 2021. True, analysts have an average $7.80 price target that implies a robust double-digit upside. Still, with a breakdown of five buys, 10 holds, and one sell, PTON is one of the fall stock clean-up names.
Apartment Investment & Management (AIV)
As a real estate investment trust (REIT) focused on its namesake industry, Apartment Investment & Management (NYSE:AIV) might seem a compelling idea on the surface. However, I believe AIV belongs on your radar for stocks to sell in Autumn.
Sure, on a cynical level, those who missed out on the post-pandemic housing boom – of which there were many – are now forced to be renters. Subsequently, companies like Apartment Investment & Management (better known as Aimco) can take advantage. Certainly, jacked-up rents have sparked outrage but folks have to live somewhere.
However, the reason why AIV ranks among the stocks losing momentum in the fall may center on declining average daily occupancy rates. Basically, you can only milk your tenants for so much before they crack. And broader evidence suggests we may be approaching that breaking point. Tellingly, only one analyst – Andrew Rosivach from Wolfe Research – presently covers AIV stock. Further, the rating is a “hold” without a price target. Still, if you read between the economic lines, you may come away believing AIV is one of the stocks to avoid in autumn.
Mullen Automotive (MULN)
I’m about to get massacred (digitally speaking of course) when mentioning electric vehicle manufacturer Mullen Automotive (NASDAQ:MULN) in the same article discussing stocks to sell in Autumn. Don’t take that the wrong way. We, investors, should be so lucky to buy shares of an enterprise that features so much intense loyalty.
However, that same loyalty can also cloud judgment, in my humble opinion. I’ll share a quick story. On Aug. 3, I published my not-so-encouraging view on MULN stock. Essentially, a combination of a rough economic backdrop and lack of operational progress symbolized a clear warning to prospective speculators. Following the article, one gentleman offered to educate me (politely, I must say) about Mullen.
Sadly, I wish that more people would press Mullen and flailing companies like the EV maker rather than attempting to sway influencers’ opinions. Case in point: Since my article was published, MULN hemorrhaged 51% of its equity value. Certainly, you’re free to disagree and call me a clown for not believing in Mullen. However, the continued losses imply that it’s actually one of the end-of-summer stock sales.
American Eagle (AEO)
Moving from one of the most ardently supported enterprises to one with arguably less fanfare, American Eagle (NYSE:AEO) once symbolized must-have fashion for the young generation. However, since the Great Recession, AEO has been see-sawing wildly. In fact, take away the peaks and valleys, and what you’re left with is a flat trendline. Thus, it’s one of the stocks to sell in Autumn.
Again, American Eagle perfectly epitomizes the concept of don’t kill the messenger. Per data from Fintel, the number of insider purchases amounts to 28 transactions. Further, the most recent buy occurred in late July of last year. On the other hand, the number of insider sales amounts to 150 transactions. The latest exiting occurred in April of this year. If AEO isn’t one of the candidates for fall stock clean-up, those closest to the business are sending mixed signals.
Speaking of mixed signals, analysts rate AEO as a consensus hold. However, with a price target of $14.50, investors may face sizable losses. It’s probably time to exit while you still can.
Carvana (CVNA)
One of the most remarkable entities of the year, so far, online used-car retailer Carvana (NYSE:CVNA) has swung up more than 900% since the Jan. opener. So, for those that have been negative on CVNA – including yours truly – yes, mentioning CVNA as one of the stocks to sell in Autumn is the equivalent of a clown show.
Still, once whatever this is starts returning to some semblance of normal, CVNA could again become one of the stocks to avoid in autumn. Fundamentally, the narrative just doesn’t support Carvana. Specifically, data from S&P Global Mobility points out that the average age of passenger vehicles on U.S. roadways hit a record 12.5 years. Put another way, stifling inflation has forced people to hold onto their vehicles for longer than ever.
If you’re looking to speculate, an auto parts retailer might be a better idea. Further, if you wanted to gamble on auto dealerships, brick-and-mortar plays would likely be more enticing. After all, Carvana no longer enjoys the COVID-19 tailwind of seeking contactless services.
Lastly, analysts peg shares a hold with an average price target of $40.13, implying sizable downside.
Cricut (CRCT)
Talk about stocks to sell in autumn (or any season) long enough and you’re bound to encounter companies that you like as a consumer but not as an investor. Such is the case with Cricut (NASDAQ:CRCT). Based in South Jordan, Utah, Cricut manufactures smart cutting machines while providing an easy-to-use app. With this combination, users can create custom cards, unique apparel, and other household items.
I have to admit that I’ve been thinking about buying one myself; yeah, I know – so alpha male of me. However, my liking of the product cannot overcome my concerns about the business. Since hitting a revenue tally of $1.3 billion in 2021, the following year saw an erosion to $886.3 million. Even worse, in the second quarter, sales came out to $177.8 million, a loss of 3.3% YOY.
To be fair, CRCT does have a decently stable balance sheet. Still, it’s one of the stocks losing momentum in the fall and it’s not hard to see why. Glaringly, analysts peg CRCT as a moderate sell. Also, the downside price target sits at $7.88. It’s probably safer to stay away.
Affirm (AFRM)
A consumer-lending financial technology (fintech) specialist, Affirm (NASDAQ:AFRM) provides a buy now, pay later (BNPL) platform. A few days ago, AFRM attempted to reverse its negative trajectory. Without Affirm’s surprising fiscal Q4 earnings beat and optimistic guidance for Q1, shares would have easily made a case for stocks to sell in autumn.
As it stands, it’s still one of end-of-summer stock sales. It’s just that the magnitude of pessimism may be tempered a bit. To be fair, the company provided exactly what it needed in terms of the financial print. However, Affirm faces severe obstacles within the broader consumer economy. Folks are tired, indebted, and are also in many cases losing their jobs.
Sure, that might sound appealing for a BNPL operator. However, someone’s going to be on the hook if customers can’t pay back their loans. Therefore, not every analyst was moved by Affirm’s Q4 performance. Right now, analysts peg AFRM as a hold. This breaks down as three buys, eight holds and four sells. With a downside price target of $15.80, it’s probably wiser to steer clear.
On the date of publication, Josh Enomoto did not have (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.