5 Stocks to Sell Now
Come out ahead (if you still can) and lose these laggards.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Our pans fall into two categories: companies with poor prospects and those with better prospects that trade at absurdly high prices. If you own any of these five stocks, consider dumping it, or at least paring back, especially if doing so won’t result in a taxable gain.
We start with three companies that pay generous dividends but appear to be struggling to keep up the disbursements. On the surface, profits seem to be rising at CenturyLink (CTL). But take out one-time items and the telecom company’s operating income and cash flow are down from a year ago, largely because customers are dropping their landline phones. Moreover, analysts expect virtually no profit growth over the next few years. What’s holding up the stock price is the fat $2.16-per-share annual dividend, which gives the stock a 6.4% yield. But CenturyLink cut the payout in 2013, and Brad Lamensdorf, co-manager of the Ranger Equity Bear ETF, expects it to do so again within the next year.
A juicy dividend is also propping up shares of Diebold (DBD). The maker of automated teller machines is paying at an annual rate of $1.15 per share, and it has a long history of yearly dividend hikes. But those increases have gotten smaller as Diebold’s finances have gotten tighter. Declining sales, a major restructuring and the recent departure of the company’s chief financial officer all raise red flags. Plus, declining cash flow puts the dividend in jeopardy. Finally, the stock, at 18 times projected earnings, isn’t cheap. (All data are through Nov. 1.)
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Dominion Resources (D) owns regulated electric utilities in Virginia and North Carolina, regulated natural gas utilities in Ohio and West Virginia, as well as various unregulated units. Analysts expect earnings to grow at a 7% annual clip over the next few years. That’s not terrible, but the stock sells for a lofty 18 times estimated year-ahead earnings. Also troubling is that Dominion has been borrowing money and issuing stock to support its $2.25-per-share annual dividend. The company can’t keep making those generous payments forever.
Turning to stocks in fantasyland, Tesla Motors (TSLA) undeniably makes great cars (see Putting Tesla to the Test). Founder Elon Musk is considered a visionary in the same mold as Henry Ford. But Tesla’s stock, which has zoomed by a factor of seven since going public three years ago, is priced for a perfect future. It sells for 135 times estimated earnings for the next four quarters. Any stumble will deliver a nasty shock to Tesla bulls.
Like Tesla, 3D Systems (DDD) is a hot stock in a hot industry. Shares of the maker of three-dimensional printers have nearly quadrupled over the past two-and-a-half years. Although 3D’s printers could revolutionize manufacturing, the company needs to drum up interest among consumers to support a stock that sells for 53 times projected year-ahead earnings. That hasn’t happened, Lamensdorf says. The printers hit Staples shelves last summer, but his checks indicate that few have sold, apparently because they’re expensive and because consumer applications aren’t obvious.
-
Dow Adds 1,206 Points to Top 50,000: Stock Market TodayThe S&P 500 and Nasdaq also had strong finishes to a volatile week, with beaten-down tech stocks outperforming.
-
Ask the Tax Editor: Federal Income Tax DeductionsAsk the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on federal income tax deductions
-
States With No-Fault Car Insurance Laws (and How No-Fault Car Insurance Works)A breakdown of the confusing rules around no-fault car insurance in every state where it exists.
-
If You'd Put $1,000 Into AMD Stock 20 Years Ago, Here's What You'd Have TodayAdvanced Micro Devices stock is soaring thanks to AI, but as a buy-and-hold bet, it's been a market laggard.
-
If You'd Put $1,000 Into UPS Stock 20 Years Ago, Here's What You'd Have TodayUnited Parcel Service stock has been a massive long-term laggard.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
If You'd Put $1,000 Into 3M Stock 20 Years Ago, Here's What You'd Have TodayMMM stock has been a pit of despair for truly long-term shareholders.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
Why I Trust These Trillion-Dollar StocksThe top-heavy nature of the S&P 500 should make any investor nervous, but there's still plenty to like in these trillion-dollar stocks.
-
Elon Musk's $1 Trillion Pay Package Passes: What's at Stake for Tesla StockMore than 75% of Tesla shareholders voted to approve a massive pay package for CEO Elon Musk. Here's what it means for the Mag 7 stock.
