April 05, 2024
3 Stocks to Sell in April Before They Crash & Burn
The stock market has thousands of investment opportunities readily available within a few clicks. You just have to log into your brokerage account, initiate a market order for your desired ticker, and you suddenly have exposure to a company. While it’s incredibly easy to invest in stocks relative to other investments, publicly traded corporations don’t come with warning signs. You have to conduct your own research to assess if an investment makes sense for your portfolio. Some stocks are more likely to erode shareholder value than they are to generate profitable returns. These are some of the stocks to sell in April before losses accumulate. Plug Power (PLUG) Plug Power (NASDAQ: PLUG ) develops hydrogen fuel cell systems in a bid to replace gas-powered engines. The company is part of the green movement and soared roughly 2,000% from 2020 to 2021. The stock has since crashed and is down by 70% over the past year. The speculative EV stock continues to fall behind EPS expectations while posting losses. The company posted a net loss of $642 million in the quarter and only grew its revenue by 0.64% year-over-year (YoY). That’s not a good sign for a long-term investment. While Plug Power may benefit from speculative trading and a potential short squeeze, it’s not a long-term investment. Investors don’t have to take such a big risk when they can choose from many growth stocks that have expanding profit margins and compelling growth prospects. Plug Power isn’t going to reach its all-time high again. Growth stocks with rising net losses rely on significant revenue growth to remain relevant. Revenue was flat YoY, and the losses continue to pile up. Investors should avoid this stock. Coinbase (COIN) Coinbase’s (NASDAQ: COIN ) stock price movement is heavily tied to Bitcoin ( BTC-USD ). The recent release of Bitcoin ETFs has been a boon for the brokerage firm, which is up by 44% year-to-date. Many companies that launched ETFs are using Coinbase to store their crypto. Despite the excitement, Coinbase stock is very risky at current levels. The stock trades at a 208 forward P/E ratio. That assumes Coinbase maintains its current growth rate, which is unlikely. The brokerage firm is currently benefitting from a renewed interest in crypto investing and financial institutions pouring their money into crypto ETFs. The Bitcoin ETF windfall won’t be as dramatic in future years as this year. Coinbase also reported a few quarters of low revenue growth or YoY decreases before its impressive Q4 2023 results. Even with a strong finish, revenue was slightly down YoY. Coinbase’s current valuation doesn’t offer any room for error, and crypto is completely unpredictable. Electronic Arts (EA) Electronic Arts (NASDAQ: EA ) is a game maker with an aggressive monetization model that has underperformed the stock market for several years. Shares are only up by 31% over the past five years and are down by 4% year-to-date. EA trades at a 33 P/E ratio and offers a 0.59% dividend yield. The company seems as stingy with its investors as it is with its gamers. The company hasn’t hiked its dividend in two years. It’s hard to blame the company for being on the defensive if you look at its financials. Revenue only increased by 3% YoY in Q3 FY24, which isn’t what you want to see from a stock with a 33 P/E ratio. Revenue growth has been slow for a while. Net income increased by 42% YoY, but that growth rate is unsustainable since revenue is barely increasing. Investors may want to stay away from this stock. Other gaming stocks offer more promise than Electronic Arts. On the date of publication, Marc Guberti did not hold (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.
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