‘Fallen angel’ stocks, or stocks that have fallen far from their past highs, can be tempting as possible contrarian buys. Yet while there are sometimes diamonds in the rough among these names, for the most part, it’s best to consider them stocks to sell. Why? While Mr. Market may not get it right 100% of the time, stocks typically do not decline in value by a significant amount, without a good reason. Severe changes in fundamentals typically drive these declines.

While companies whose prospects go from good to bad to worse have the potential to turn themselves around, this is a lot easier said than done. That’s why so many “turnaround plays” fail to become profitable for investors. In today’s market, there are scores of “fallen angels.”

According to Finviz, nearly 1,100 stocks currently trade at prices 70% below their 52-week high. A small number of these names may have the ability to make recoveries, producing strong returns for bottom-fishing investors. However, that’s not likely the case with these seven “fallen angel” stocks to sell. Each one is at risk of experiencing another steep price decline.

Carvana (CVNA)

Speculators have bought into Carvana (NYSE:CVNA), in the hopes that shares in the online used car retailer have finally bottomed out. Even after rallying more than 90% since the start of the year, CVNA trades for 97.6% below its all-time closing high ($370.10 per share).

But to view CVNA stock as a bargain because of that fact is merely a case of anchoring bias. While Carvana shares may have been able to hit such lofty price levels during a frothier time in the stock market, that doesn’t necessarily mean it can even partially make it back to this high water mark.

In fact, CVNA may find it tough to hold onto its current “bargain” price. Scrambling to restructure its debt, as the company’s cash burn remains high, shares could again come under pressure, if it becomes more clear Carvana will need to raise capital to stay afloat.

First Republic (FRC)

First Republic (NYSE:FRC) has quickly become a “fallen angel,” as a result of this month’s banking crisis. This month, after the collapse of institutions such as SVB Financial’s (OTCMKTS:SIVBQ) Silicon Valley Bank subsidiary, concerns spiked that this bank, with its underwater loan portfolio and high level of uninsured deposits, would be the next to fail.

While an infusion of uninsured deposits from big banks has kept it from going under, FRC stock has nonetheless dropped in price by nearly 90% in the past month, on the expectation further bailout/rescue will be needed. Still, with FRC finding support at around $13 per share, some may believe that the worst is already priced in.

Unfortunately, despite the big prior declines, downside risk remains high. The big bank deposit infusion is only a temporary solution to FRC’s liquidity problems. Also, today’s valuation may not fully reflect unrealized loan losses.

Lucid Group (LCID)

Shares in early-stage electric vehicle (or EV) company Lucid Group (NASDAQ:LCID) have come a long way from their glory days in 2021 when investors were confident that Lucid was a possible future competitor to Tesla (NASDAQ:TSLA).

That said, while LCID stock has pulled back since the EV maker’s last quarterly earnings report, which fell short of expectations, shares remain in the green for 2023. However, LCID could ultimately give back these partial gains, and then some. Why?

As I’ve argued in past coverage of Lucid, the company may just well still have a shot of attaining some semblance of success. Yet to get there, this for-now unprofitable firm will likely need to raise additional capital. The resultant dilution will cause shares to sink to even lower prices. With this in mind, it’s best to consider LCID as one of the “fallen angel” stocks to sell.

Lyft (LYFT)

Recently, I argued that Lyft (NASDAQ:LYFT) was at risk of additional declines, even after its sharp post-earnings plunge, and after its overall high double-digit price decline over the past twelve months. Although shares in the rideshare company have held steady since making this call, I believe this bear case still stands.

LYFT stock may be finding support, as the market perceives the appointment of a new CEO, David Risher, as a bullish sign. But while Risher may be able to steer the company towards more promising growth opportunities, like further international expansion, Risher’s talents may not be enough to counter intense competition from Uber (NYSE:UBER).

Uber dominates the U.S. rideshare space and has left Lyft at the losing end of a price war. If subsequent results signal that a big expected earnings jump will not arrive in 2024 or 2025, this former “hot stock” could tank again.

Novavax (NVAX)

During 2021 and 2022, Novavax (NASDAQ:NVAX) was one of the most-followed Covid-19 vaccine stocks. While late to the game for the 2021 U.S. vaccination wave, hopes at the time ran high that the biotech firm would at least profit from international sales of its candidate. However, this didn’t quite happen.

Although Nuvaxovid generated billions in sales last year, this wasn’t enough to make this company profitable. Realizing that a “payoff moment” would never arrive, investors have bailed on NVAX stock, sending it from $150 to $6.50 per share since 2022.

Although it may look cheap on the surface, especially as there may still be potential with its non-Covid vaccine pipeline, it’s best to consider one of the stocks to sell. Mainly, due to the prospect of continued heavy cash burn, which the company says leaves “substantial doubt” about Novavax’s ability to continue operating as a going concern.

Upstart Holdings (UPST)

Trading at just a little over $16 per share today, as compared to its all-time closing high of $390 per share, it’s an understatement to say Upstart Holdings (NASDAQ:UPST) is a fallen angel. This once-hot fintech lost its luster starting in late 2021, for two reasons.

First, after reporting a 264% increase in revenue during 2021, growth not only screeched to a halt. Revenue in 2022 declined by 1%. Second, concerns spiked that Upstart’s artificial intelligence-powered lending model will fail to hold up during an anticipated recession. Sure, since this massive tumble, UPST stock has seemingly found a floor.

Recent macro changes like high-interest rates and slowing economic growth have yet to “break” Upstart’s lending model. Not only that, analysts expect the company to become profitable next year. Still, as recession risk continues to loom, the story with Upstart could continue to unravel, making it risky, even at today’s prices.

WeWork (WE)

WeWork (NYSE:WE) is clearly a fallen angel, but I’ll admit that it may be too late to say that it’s one of the stocks to sell. The coworker space provider is already buried deep in the stock market graveyard, after falling from $10 to under $1 per share.

That said, some may be interested in buying WE stock, on the view that a recent debt restructuring deal will kick off a recovery. This deal has perhaps kept WeWork out of bankruptcy. However, don’t assume that better times lie ahead.

WeWork continues to report heavy losses. The restructuring only eliminated a portion of its outstanding debt. Although the company has been working to reduce cash burn, it likely needs higher levels of growth in order to reach profitability. The chances of attaining this remain questionable, considering how the corporate world’s “back to the office” push isn’t going as planned.

On the date of publication, Thomas Niel 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.