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5 Stocks to Sell or Avoid Now

It’s been a horrific year so far for equities, and yet the market remains littered with stocks to sell in anticipation of even deeper losses.

True, one of the worst starts to a year in market history has surely created a smorgasbord of bargains. But it hardly follows that every stock is worth buying on the dip. 

Although being greedy when others are fearful is a generally fine first principle, remember that some stocks go down for good reasons. Such stocks to sell have plenty of room to decline even further.

Given that negative ratings on equities are exceedingly rare on Wall Street, it seemed like a good time to see which names analysts collectively single out as stocks to sell now. To that end, we used data from YCharts and S&P Global Market Intelligence to screen the Russell 1000 index for the stocks with the highest-conviction consensus Sell recommendations by industry analysts.

Here’s how the ratings system works: S&P surveys analysts’ stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Any score equal to or below 3.5 means that analysts, on average, rate the stock at Sell. The closer a score gets to 5.0, the stronger the consensus Sell recommendation.

After running the screen we were left with a very short list of names. (As we said above, Sell calls are rare.) And although they come from sectors as diverse as retail, insurance and utilities, they all have one thing in common: The Street expects them to underperform the broader market handily over the next 12 months or so.

Read on for more information about Wall Street’s top five stocks to sell now.

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Share prices, price targets, analysts’ recommendations and other market data are as of March 9, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Stocks are listed by conviction of analysts’ Sell calls, from weakest to strongest. 

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Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash

As mortgage rates continue their ascent toward 6%, more and more folks are talking housing market crash. But high interest rates aren’t really a catalyst for a crash, especially if the high rates aren’t really high. Emphasis on “real,” as in inflation-adjusted. Everything has gone up in price, and wages should also be rising. This… Read More »Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash

The post Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash appeared first on The Truth About Mortgage.

Stock Market Today: Stocks, Bonds, Crypto and More Take a Dive

The S&P 500 fell to its lowest point in more than a year Monday as last week’s selloff retained all of its momentum and bled into just about anything that trades.

Interest-rate fears continued be the selloff’s primary driver. The 10-year Treasury briefly touched 3.2% today and, even after pulling back to 3.06%, sits around levels last seen in 2018.

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“Interest rates are a hammer, not a scalpel – they are blunt tools designed to move slowly and with great force, rather than precisely,” says Andy Kapyrin, co-chief investment officer at registered investment advisory firm RegentAtlantic. “The Fed is swinging the interest rate hammer, and the financial markets are responding to the aftershocks.”

Technology (-3.9%) and consumer discretionary (-4.3%) were among the usual suspects in a trading day that saw each of the 11 S&P 500 stock sectors finish in the red. But this was a wide selloff that went well beyond just stocks and bonds.

U.S. crude oil futures, for instance, cratered by 6.1% to $103.09 per barrel, amid ongoing worries that China’s strict COVID-19 lockdowns will cramp oil prices. Indeed, energy (-8.3%) was Monday’s worst-performing sector, with even blue chips such as Exxon Mobil (XOM, -7.9%) and Chevron (CVX, -6.7%) taking it on the chin.

Gold futures? A bad day, too, off 1.3% to $1,858.60 per ounce as investors piled into the U.S. dollar. 

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Cryptocurrencies haven’t provided safety, either. Bitcoin, which fell as low as $30,375 and finished off 13.4% to $31,153, has now fallen by more than 50% from its November 2021 peak. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)

Edward Moya, senior market strategist at currency data provider OANDA, notes that institutional buyers are starting to pay close attention to Bitcoin, given that many who got in during 2021 are now losing money on their investment. “If the $30,000 level breaks, that could trigger a flash crash environment if several whales unload,” he says.

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The Nasdaq Composite (-4.3% to 11,623) has re-entered bear-market territory, off nearly 28% from its January highs. The S&P 500 (-3.2% to 3,991 – its lowest close since March 31, 2021) needs to lose another 4% or so before entering a bear market, while the Dow Jones Industrial Average (-2.0% to 32,245) would have to retreat another 9%.

YCharts

Other news in the stock market today:

  • The small-cap Russell 2000 sank by 4.2% to 1,762.
  • Palantir Technologies (PLTR) stock surrendered 21.3% after the data analytics company reported lower-than-expected first-quarter earnings per share (2 cents actual vs. 4 cents estimated). The company also gave current-quarter guidance below Wall Street’s estimates, adding that there is “a wide range of potential upside to our guidance, including those driven by our role in responding to developing geopolitical events.” One high note of PLTR’s financial results was its Q1 revenue of $446.4  million, up 31% year-over-year and above the average estimate.
  • Rivian Automotive (RIVN) plummeted 20.9% after sources told CNBC that Ford Motor (F, -5.9%) will sell 8 million RIVN shares after the electric vehicle maker’s insider lockup period expired on Sunday. The news also dragged on Amazon.com (AMZN, -5.2%), which owns roughly 158.4 million RIVN shares, according to S&P Global Market Intelligence. “The news is not surprising to us, especially after the two companies terminated a partnership to jointly develop an EV last November and as Ford begins deliveries of the F-150 Lightning, a direct competitor to Rivian’s R1T pickup truck,” says CFRA Research analyst Garrett Nelson, who maintained a Hold rating on the EV stock.

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Green ink was in shockingly short supply Monday – but relative success was found among the usual suspects. 

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“This collapse should continue the rotation into defensive dividend stocks,” says Jay Hatfield, chief investment officer of ETF manager Infrastructure Capital Management. 

Consumer staples, which was only marginally lower Monday, and utilities, second-best at a 0.8% decline, are among such beneficiaries, Hatfield says.

Among their greatest qualities right now is what’s sure to be a common refrain in near-term investment advice: pricing power. In short, as inflation continues to march unimpeded, those companies that are best able to push most of those prices on to consumers should fare best – and while your average American might go a few extra months without taking a vacation or buying a new pair of Nikes, they’re unable to pull back much on basic necessities such as food and electricity. 

Read on as we examine a number of stocks with exceptional pricing power – as well as highlight several names that, while good companies in their own right, will have an uphill battle as long as inflation remains white-hot.

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Stock Market Today: Stocks Suffer Worst Losses of 2022

The major indexes wiped out yesterday’s relief-rally gains and then some Thursday in a market-wide rout as Wall Street took a more sober look at the investing landscape.

For one, most of the worries hanging over stocks haven’t disappeared, including on the interest-rate front. While Federal Reserve Chair Jerome Powell did dismiss the idea of a 75-basis-point hike yesterday, the expectation is for at least two more 50-basis-point hikes at the next two Federal Open Market Committee meetings – a still-considerable level of monetary tightening.

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“We are still not out of the woods yet, as there is still too much uncertainty over how the Federal Reserve’s actions will tame inflation without causing a recession,” says Zach Stein, chief investment officer of climate change-focused investment manager Carbon Collective.

Indeed, the yield on the 10-year Treasury, which retreated yesterday, roared back to life Thursday to eclipse 3% once more. That weighed particularly hard on rate-sensitive growth places in tech and tech-esque stocks such as mega-caps Tesla (TSLA, -8.3%), Nvidia (NVDA, -7.3%) and Apple (AAPL, -5.6%).

Speculative assets such as cryptocurrency went heavily risk-off, too; Bitcoin, for instance, plunged 8.9% to $36,287. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)

Gene Goldman, chief investment officer of Cetera Investment Management, pointed to additional drivers for Thursday’s woes.

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“There is less optimism around the less hawkish Fed and the softish landing scenario,” he says. “We saw data this morning portraying more inflation and a weaker economy – labor costs surged in Q1, unemployment claims rose, and productivity was weaker than expected.”

Goldman also pointed to disappointing earnings reports from the e-commerce industry, which, because of high valuations to boot, were selling off particularly hard.

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Shopify (SHOP), for one, plunged 14.9% after the e-commerce company reported lower-than-expected adjusted earnings and revenue in its first quarter (20 cents vs. 63 cents est.; $1.2 billion vs. $1.24 billion est.) and projected soft revenue guidance in the first half amid tough comparisons. SHOP also said it will buy San Francisco-based fulfillment startup Deliverr for $2.1 billion.

“Although e-commerce growth was below our view, SHOP is lapping pandemic figures, with comparisons to get more favorable exiting the calendar year,” says CFRA Research analyst Angelo Zino (Hold). “That said, we do think consensus expectations will need to be tempered, partly reflecting lower than expected merchant additions to start the year.”

eBay (EBAY, -11.7%) spiraled lower despite topping first-quarter estimates after it forecast second-quarter revenues of $2.35 billion to $2.40 billion and adjusted earnings of 87 to 91 cents per share, both under expectations for $2.54 billion and $1.01 per share, respectively. Etsy (ETSY, -16.8%), meanwhile, slightly beat revenue expectations but was merely in-line on profits and forecast Q2 sales of $540 million to $590 million, falling far short of the $627 million analyst mark. Amazon.com (AMZN) bled 7.6% in sympathy.

The result was the worst single-session performance of 2022 for both the Nasdaq Composite (-5.0% to 12,317) and Dow Jones Industrial Average (-3.1% to 32,997), while the S&P 500 (-3.6% to 4,146) was just a hair shy of outdoing its marginally larger decline April 29.

YCharts

How low could we go from here?

Well, a bear market (a 20% drop from highs) would mean about 3,850 for the S&P 500, and John Lynch, chief investment officer for Comerica Wealth Management, thinks the index could scrape that figure.

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“Bear markets without recession tend to be short and shallow,” Lynch says. “It’s conceivable the S&P 500 needs to establish a bottom in this 3,850 to 4,000 range. Without recession in 2022, which is our base case, stocks can resume higher as equity investors discount cyclical recovery in an environment where monetary policy is no longer shepherding expensive growth and technology names at a multiple of sales.”

Other news in the stock market today:

  • The small-cap Russell 2000 dropped 4.0% to 1,871.
  • U.S. crude oil futures eduged up 0.4% to settle at $1081.26 per barrel.
  • Gold futures gained 0.3% to finish at $1,875.70 an ounce.
  • Booking Holdings (BKNG) was a rare splash of green today, adding 3.3% after the online travel company reported earnings. In its first quarter, BKNG reported earnings of $3.90 per share on $2.7 billion in revenue, more than the 85 cents per share and $2.5 billion analysts were expecting. The company also posted gross bookings of $27.3 billion, a record quarterly amount. “We have a favorable view of online travel companies, and particularly of BKNG given its focus on Europe, where it generates most of its gross profit,” says Argus Research analyst John Staszak (Buy). “BKNG is trading at a projected 2022 price-to-earnings ratio of 20.2, below the average for other online booking companies; however, we believe that it merits a higher multiple given the company’s strong earnings outlook.”

Warren Buffett Splashes More Cash

Warren Buffett is spending like there’s no tomorrow. A Wednesday evening regulatory filing from Berkshire Hathaway (BRK.B, -2.5%) revealed that the Oracle of Omaha’s holding company bought $350 million shares in energy firm Occidental Petroleum (OXY, +1.2%). 

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The Berkshire Hathaway equity portfolio has plumped up on Occidental exposure in recent months – Buffett revealed a nearly 10% OXY stake in early March that now sits at 15.2%, and he also owns $10 billion worth of 8% preferred stock, as well as 84 million warrants to purchase OXY stock. The move is part of Buffett’s renewed buying interest in energy that has seen Chevron (CVX) become Berkshire’s fourth-largest holding.

All of this falls under an even larger underlying theme, which is that Buffett has gone from being a voracious seller in 2021 to buying everything that isn’t tied down this year. Part of that seems to be the Oracle taking advantage of a considerable dip in the market. But a closer look at what Buffett’s buying signals that he, like the rest of us, has rapidly rising prices on the brain.

We recently talked to noted Buffett expert David Kass about the Berkshire CEO’s recent binge, and how much of Warren Buffett’s activity has been connected to inflation.

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10 Things You’ll Spend More on in Retirement

Even if your real retirement is years away, you’ve already had some practice.

That came during the pandemic lockdown and into its aftermath, when many of us were tucked away at home, working remotely. Except for the part where you’re actually working and getting a full paycheck, this is similar to what life is like for many retirees.

So ask yourself: How did your spending fare on that retirement test drive?

Before you can determine how much you will need to save for a fulfilling retirement, you first need to know how much you will spend in retirement. You’ll also need to factor in soaring prices on everything from gas to groceries. Sure, inflation affects everyone, but it could hurt more in retirement when your income will probably be lower.

Financial planners have estimated that retirees need 80% or more of preretirement income to maintain their standard of living, though individual situations vary greatly. Another data point that correlates: According to the Bureau of Labor Statistics’ annual survey on consumer spending, the average retired household spends 25% less than the average working household each year.

That said, some items to do stand out in a retired household, including big-ticket expenses such as health care and travel. Here’s a look at 10 budget categories where retirees are likely to spend more and some tips on keeping costs in check.

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