Steer clear of stocks to avoid in order to effectively protect your investment portfolio.
Moreover, the essence of investing is identifying the next high-flying stock and knowing which stocks to avoid. Additionally, in the past year, we’ve seen how investors have rushed into stocks with overstretched valuations in the fear of missing out. Also, several investors have tried to catch the next big AI penny stock, only to catch falling knives instead.
Keeping that in mind, you should prune the following three stocks from your portfolio.
Lucid Group (LCID)
Once a promising player in the hotly competitive Chinese EV space, Lucid Group (NASDAQ:LCID) languishes in penny stock territory. LCID stock is trading more than 95% below its all-time high of $58.05 in February 2021. Moreover, it continues to get hammered by the stock market due to deplorable sales and a relentless cash burn.
Unlike most of its competition, though, Lucid’s survival hinges on the dilutive yet critical cash infusions from Saudi Arabia’s Public Investment Fund (PIF). However, such a strategy is unlikely to bear fruit as Lucid struggles to find its feet in the EV space. Additionally, its cash reserves have dropped roughly 65% from their 2021 balance of $6.26 billion.
In recent news, the company laid off 6% of its workforce to control the bleeding. Nevertheless, forward estimates suggest that the company will remain in the red this year and the next. Hence, with the broader market slowdown in mind, LCID is arguably the worst EV stock bet at this point.
Peloton Interactive (PTON)
Peloton Interactive (NASDAQ:PTON), once the crown jewel of pandemic fitness, is now struggling to survive in the post-pandemic slump.
With people favoring gym sessions instead of home workouts, Peloton Interactive’s connected exercise equipment has fallen completely out of favor. It’s up against multiple headwinds, including stiff competition, the economic slowdown and operational hurdles.
The company hasn’t turned a profit since December 2020 and is unlikely to do so in the near future. Additionally, multiple safety recalls, including the most recent one in May, recalled two million bikes. Also, the firm has slashed 15% of its workforce and seen its Chief Executive Officer (CEO) depart, part of its belt-tightening efforts.
Despite these measures, analysts forecast that despite aggressive cost-cutting measures and strategic overhauls, Peloton Interactive is likely to continue posting losses for the foreseeable future. PTON stock dipped more than 50% last year and north of 40% year-to-date (YTD), offering limited upside potential for investors.
Akoustis Technologies (AKTS)
North Carolina-based Akoustis Technologies (NASDAQ:AKTS) develops sophisticated radio frequency filter products.
Despite operating a high-growth business over the years, it has witnessed a dramatic slowdown in recent quarters. It has missed top-line estimates by considerable margins in five of the past six quarters. Additionally, it has missed earnings estimates in the past four quarters. Consequently, the stock is down more than 70% YTD, following up on its dismal showing last year, when it lost 95%.
Moreover, this shortfall reflects deeper financial woes, indicated by a 50% jump in net losses to $23.3 million and a disappointing earnings per share (EPS) deficit of 26 cents. Furthermore, the firm’s cash till and short-term assets base has dropped a substantial 65% from June last year, currently at just $15.2 million in cash. Additionally, to stay afloat, it recently issued 50 million shares at a mere 20 cents each, aiming to gather $10 million for its working capital needs.
On the date of publication, Muslim Farooque 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