While it’s always fun to see the ideas on your buy list perform well, long-term success is dependent on recognizing stocks to sell. No, it’s often not a comfortable topic to broach. However, holding onto losing enterprises indefinitely could end up hurting your portfolio badly.
At the end of the day, everyone in the market is looking out for themselves. In that sense, there’s really no rational reason to be loyal. That commitment will usually not be reciprocated if the shoe were on the other foot. So, think about protecting yourself first and consider exiting these stocks to sell.
Spirit Airlines (SAVE)
Based in Florida, Spirit Airlines (NYSE:SAVE) obviously provides airline services. Per its public profile, it also offers hotels and rental car services. Fundamentally, it raises red flags regarding stocks to sell because of the underlying economic currents. As McKinsey & Company pointed out, the travel sector may fully recover by year’s end.
Part of the positive sentiment stems from travel prioritization. While not as acute as the revenge travel phenomenon, consumers are prioritizing experiential expenditures. That should be a huge boon for a discount airliner like Spirit. Instead, the company is moving in the wrong direction. Since the beginning of the year, SAVE stock fell almost 78%.
Now, I don’t discount that at certain moments, contrarian speculators could come in and bid up shares. According to Fintel, SAVE’s short interest stands at 25.29% of its float. I wouldn’t directly short the enterprise, to be clear.
However, even out to 2026, analysts don’t see a pathway to profitability. That’s distracting amid a sea of opportunities for investors. Therefore, it’s one of the stocks to sell, like analysts are saying.
Big Lots (BIG)
Falling under the consumer defensive ecosystem, Big Lots (NYSE:BIG) operates in the discount stores segment. Through its subsidiaries, the Columbus, Ohio-based enterprise offers products under various merchandising categories. Fundamentally, the issue for Big Lots is that it has massive competition. Also, in many of the segments it covers, the retailer suffers from pressure from e-commerce outlets.
Financially, it’s just difficult to see how Big Lots can work itself out of its mess. For instance, it incurred a net loss of $481.88 million during the trailing 12 months (TTM), translating to a loss per share of $16.53. On the top line, sales came out to $4.72 billion. For 2024, analysts anticipate sales of only $4.52 billion while the company could lose $10.20 per share.
As with Spirit Airlines, I wouldn’t directly short BIG stock. Per Fintel, BIG features a short interest of 23.26% of its float. Also, the short interest ratio stands at 8.23 days to cover. Due to speculation, shares could temporarily soar.
However, analysts don’t see a clear path to profitability and that’s why they view it as one of the stocks to sell.
Faraday Future (FFIE)
During the return of meme-stock mania, electric vehicle manufacturer Faraday Future (NASDAQ:FFIE) became a short-squeeze target. Even now, while its short ratio sits at 0.05 days to cover, the short interest itself has soared to 31.5%. That’s just wild and it presented even wilder returns. Just imagine one day, shares are trading at four cents a pop. A few days later, they’re nearing $2.
However, the mercurial rise Faraday seems to be nothing more than a pump and dump. In the past five sessions, FFIE stock lost over 57% of market value. That’s because the company is broadcasting a going concern risk. For started, Gurufocus warns that Faraday suffers from five severe red flags, including mounting debt and distressed financials.
Second, the performance is nowhere near a level approaching credibility. In the fourth quarter of last year, the company only generated $800,000 of revenue. In a capital-intensive market such as auto production, that’s just not working.
Finally, the company wants to sell its EVs for over $300,000. I mean, come on! That should have been the first clue. It’s one of the stocks to sell.
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.