Investor Warning: 3 Stocks Primed for a June Selloff

Stocks to sell

As we approach the midpoint of 2024, it’s crucial to review your portfolio and eliminate any underperforming stocks. Many companies have revised their full-year guidance based on the first half of 2024. This presents an opportunity to sell off overpriced, low-return stocks and take charge of your investment strategy.

These three stocks to sell are by no means bad and certainly have excellent potential for future growth. However, due to their most recent financials, the outlook for this year, ongoing challenges and future bumps expected down the road, you may want to sell while they are priced high and pick up some new stocks that will be more profitable this year.

Let’s learn about the problems that these companies are facing and why management seems to think they won’t be able to overcome them so quickly this year.

Netflix (NFLX)

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Netflix (NASDAQ:NFLX) is arguably the most popular streaming company in the world right now. So, why would this stock, which has seen a rise in subscribers after implementing a password-sharing crackdown, be a sell? To start, there is a bit of an overestimation of how far and how high this new subscriber growth will carry Netflix in the coming years.

Given that the new policies to prevent password sharing and encourage more subscriptions are relatively new, the resulting increase in subscribers is at its peak right now. That said, it is likely that the current momentum Netflix is seeing will face a slowdown. One major indicator of this is the seemingly new business model Netflix has its eyes on.

Starting in the first quarter of 2025, Netflix has said that it will no longer report its subscriber count. While the company has not yet disclosed the exact reason behind this change, it is likely to shift its focus away from simply the number of subscribers and toward the overall optimization of the streaming service.

While this will likely create strong profitability in the coming years, it will likely cause a short-term deceleration of subscriber growth and a dip in value. Netflix trades at a price-to-earnings ratio of 43.82, meaning it’s pretty expensive. Now could be a great time to sell, considering the prospects for this company’s near future.

Clorox (CLX) 

Source: TY Lim / Shutterstock.com

Despite being a top-rated stock earlier this year, cleaning product giant Clorox (NYSE:CLX) is seeing a tremendous downgrade and sell-off after another disappointing quarter for sales, resulting in a decrease in the outlook for the remainder of this year.

Last year, Clorox faced a major challenge after being victim to an extensive, large-scale cyber attack. Specific details from the attack were never fully disclosed, but we know Clorox had to pay a total of around $49 million to investigate, find the source and then remedy the victims of the attack as well as its own systems.

Overcoming this setback has been difficult, especially given Clorox’s declining sales over the past year. In the most recent quarter, Clorox saw a 5% decrease in net sales, and the outlook for the rest of this year indicates that the company’s sales will continue to take a hit and come out at the low end of the range for 2024.

Difficulties with foreign exchange rates and struggles with maintaining demand will make for a tough rebound for Clorox. The stock has a solid history, but investors may want to let go of it while they still can this month.

Home Depot (HD)

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Home Depot (NYSE:HD) has been a top home improvement retail industry company for many years and is undoubtedly a strong stock. Despite this, the retailer has had a tough year so far in 2024, and given its recent downward trajectory, it is priced too high to continue to hold.

Including missing revenue estimates, Home Depot’s most recent quarterly earnings showed a decrease of 2.8% in comparable sales and a 19 cent decrease in earnings per share year over year. Net sales were down overall in stores, and a smaller ticket per customer showed a downward fluctuation in consumers investing in home improvement.

High interest rates and a dramatic cool-off from the hot home improvement trend during the pandemic will probably create some tough quarters for Home Depot. Investors could use the money from Home Depot’s excessively high valuation to buy some more promising stocks this year.

On the date of publication, Joel Lim 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.

Joel Lim is a contributor at InvestorPlace.com and a finance content contractor who creates content for several companies like LTSE and Realtor, along with financial publications, including Business Insider, Yahoo Finance, Mises Institution and Foundation for Economic Education.

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