The stock market can be a wild rollercoaster ride. Not everyone has the stomach for all the ups and downs in the market. Hard-earned cash can get burned through novice mistakes, market surprises, or other events. As a result, some investors are on the lookout for stocks to sell.
Many investment advisors and brokerages offer research and recommendations to help investors decide which stocks their customers should buy or cut out of their portfolios. But if you’re looking for more, I’ll look at three stocks with failing marks on Wall Street today. To screen for my list, I used the criteria below.
- Stocks with sell recommendations from analysts
- Companies with a decline in the latest reported annual earnings
- A decline in the latest reported annual revenue
Then, I arranged the top three stocks from lowest to highest net income decrease. Here are the results:
Zim Integrated Shipping Services (ZIM)
Zim Integrated Shipping Services (NYSE:ZIM) is one of the top 20 global container liner shipping carriers and operates a fleet and network of shipping lines specializing in cargo handling and transportation services.
Its global network operates in Africa, the Americas, Europe, Asia, and Oceania. The company is undergoing a fleet renewal program to revamp its fleet and transition to a fuel-efficient modern containership.
According to its latest financials, Zim Integrated suffered a significant setback in 2023. Revenue fell by a whopping 59% YOY, ending at $5.16 billion compared to $12.56 billion in 2022. Scrutinizing the report further leads to several other harrowing metrics.
Adjusted EBITDA fell 86%, the average freight rate per twenty-foot equivalent unit (TEU) decreased by 63%, and the company’s net leverage ratio (a measure of its ability to meet its financial obligations) was 2.2x. For reference, the typical low-risk net leverage ratio is closer to 1.0.
Finally, the company’s net loss hit $2.69 billion, starkly contrasting 2022’s $4.63 billion profit.
President and CEO Eli Glickman’s statement in the report was also quite telling. He said, “Looking ahead, we intend to continue to take decisive steps to further benefit from our strategic transformation and expect ZIM to emerge in a stronger position than ever in 2025 and beyond.”
Read between the lines: Glickman’s statement says 2024 will not be Zim Integrated’s turnaround year. No wonder analysts rate ZIM stock as a hold, though some sources rate it as a sell.
NL Industries (NL)
NL Industries (NYSE:NL) is a holdings company that owns CompX. CompX specializes in locking mechanisms for transportation, furniture, and other applications. Through its marine components operations, the company also produces stainless steel exhaust systems, throttle controls, and related hardware. NL Industries also owns a minority non-controlling interest in titanium dioxide pigments producer and marketer Kronos Worldwide.
The company reported a slight decline in revenue for FY’23, ending the year at $161.3 million compared to 2022’s $166.6 million. While that might not sound so bad, the real bad news can be found further down their report.
Net loss was $2.3 million, a 106.8% decrease from 2022’s $33.8 million profit. The report also showed a $15 million loss from Kronos Worldwide, potentially signifying unsustainable demand fluctuations. As a result, Barclays (NYSE:BCS) recommends selling NL stock.
Marcus & Millichap (MMI)
Marcus & Millichap (NYSE:MMI) is a real estate investment, financing, research, and advisory firm in the US and Canada. The company has been operating for over 50 years and offers property search functions, market research, real estate news, and more. It also operates a 1031 exchange for accredited real estate investors.
Like the two others on this list of stocks to sell, 2023 was not a good year for Marcus & Millichap, as its top line fell by $655.8 million or 50.4% YOY. Despite lowering operating expenses and services costs by 39.4% and 63.0%, the company ended the year with a $34 million loss. That’s a 132.63% decrease compared to 2022’s $104.2 million net income. Yikes.
While the company is confident it is poised to “overcome the near-term challenges,” analysts at Wells Fargo (NYSE:WFC) don’t share the same sentiment. The analyst firm gives MMI stock a Sell recommendation, earning it the final spot in this edition of my “stocks to sell” list.
On the date of publication, Rick Orford 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.