With markets turning south to start 2024, now is not the time for investors to take risks. With stocks falling, investors need to avoid risky bets and play it safe until we get a clearer indication of where we’re headed in the year ahead. This means selling underperforming stocks that are likely to continue declining and steering clear of troubled companies whose share prices are likely to fall in the coming months.
With Treasury yields again rising and the timing of interest rate cuts unclear, the best advice is for investors to play defense. This is especially important as we enter fourth quarter earnings season in the coming days. Here are three stocks to sell in January before they crash and burn.
Walgreens Boots Alliance (WBA)
On the day of this writing, shares of Walgreens Boots Alliance (NASDAQ:WBA) are down about 10% after the retail pharmacy chain cut its quarterly dividend payment nearly in half. Specifically, Walgreens said that it is lowering its dividend payout to 25 cents a share from 48 cents previously, a reduction of 48%. The company said the dividend cut is being made to help “strengthen its long-term balance sheet…” The move marked the company’s first dividend cut in nearly 50 years.
Walgreens’ dividend yield is now about 4% based on the current share price. That’s down from its previous yield of more than 7%, which made Walgreens the highest-paying dividend stock in the Dow Jones Industrial Average. The selloff on news of the dividend cut further erodes WBA stock, which has declined 36% in the last 12 months. Through five years, Walgreens’ share price is down 65%, making the security a long-term loser and a stock to sell in January.
Rivian Automotive (RIVN)
Also plunging 10% in a single trading session recently was the stock of Rivian Automotive (NASDAQ:RIVN), which tanked after the company reported fourth-quarter electric vehicle deliveries that missed Wall Street forecasts. Rivian said that it sold 13,972 electric vehicles in the final three months of 2023, which was 10% less than in the third quarter of 2023 and below analysts’ forecasts of 14,430. The company blamed the delivery miss on high interest rates that have hurt consumer demand for EVs.
The missed delivery figures are the latest blow for the troubled stock of Rivian. The company’s share price plunged last October after management announced a bond issuance that diluted the holdings of existing shareholders. The company’s share price is now down 85% since its market debut in November 2021. This makes Rivian a questionable electric vehicle start-up and a stock to sell in January before it crashes and burns, or the company goes out of business.
Shopify (SHOP)
A slew of analysts have downgraded the stock of e-commerce company Shopify (NYSE:SHOP) in recent months. Right before the holidays, JMP Securities downgraded SHOP stock to “hold” from “buy” and removed its price target on the shares. The downgrades come after the company’s share price more than doubled over the past year, gaining more than 110% in 2023 and pushing its valuation extremely high. Analysts have raised concerns about the stock’s ability to continue its bull run.
More than half (56%) of analysts covering SHOP stock now rate it a “hold,” while only 40% continue to rate it a “buy.” In late November, analysts at Piper Sandler (NYSE:PIPR) downgraded Shopify’s stock, citing what it called an “untenable valuation.” While Shopify’s share price has recovered from a sharp downturn during the 2022 bear market, its stock is still 56% lower than the peak it reached in November 2021, making it a stock to avoid.
On the date of publication, Joel Baglole 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.