July 23, 2025
When it comes to investing, knowing when to sell is just as important as knowing what to buy. While most financial coverage focuses on buying opportunities, our research team has identified several companies facing significant challenges that investors should consider selling.
These stocks aren’t simply underperforming the market temporarily – they’re facing fundamental business problems, weakening financials, or carrying valuations that don’t match their current reality.
Our analysis isn’t based on short-term price movements or headline reactions. Each company has been thoroughly evaluated using multiple indicators that historically precede major stock declines.
Here are three stocks showing critical warning signs that demand your immediate attention:
Becton Dickinson (BDX)
Becton Dickinson shows how serial value-destructive acquisitions can permanently hurt a previously successful company’s competitive position and shareholder returns. The medical device company’s dramatic decline can be traced directly to two catastrophic deals: the 2015 acquisition of CareFusion for $12.5 billion and the 2017 purchase of Bard for $25 billion.
These transactions have systematically destroyed the company’s performance:
- Increased invested capital by 134% and 109% respectively
- Destroyed return on invested capital from mid-teens to mid-single digits
- Failed to generate the promised synergies that justified their enormous cost
The financial devastation from these acquisitions has proven both persistent and seemingly irreversible under current management. Despite promises of “strategic plug-in acquisitions” moving forward, the CareFusion integration difficulties apparently taught management nothing, as they proceeded with the even larger Bard transaction just two years later.
The result has been a complete collapse in operational efficiency:
- Net operating profit after tax (NOPAT) margins declined at the time of acquisitions
- Never recovered to previous levels
- Complete stagnation in NOPAT growth, remaining flat at $1.8 billion since 2021
At current valuation levels offering just a 2% NOPAT yield with no growth prospects, Becton Dickinson provides no compelling investment rationale even for income-focused investors. The combination of destroyed returns, stagnant growth, and ongoing regulatory challenges creates multiple headwinds with no clear catalysts for improvement.
The company also faced a December 2024 SEC settlement over allegedly misleading investors about Alaris infusion pump risks, adding regulatory concerns to operational problems.
For shareholders who have endured 42% total returns over eight years compared to the S&P 500’s 199% return in the same period, the mathematical case for continued holding has evaporated.
Pegasystems (PEGA)
Pegasystems faces an extraordinary legal and reputational crisis that has prompted even traditionally patient institutional investors to abandon ship after a 14-year investment period. The software company’s ongoing legal battle with competitor Appian has evolved from a business dispute into a fundamental question about corporate governance and ethical business practices.
The Virginia Supreme Court’s agreement to review the case in March 2025 brings renewed focus to the $2.036 billion judgment initially awarded to Appian in 2022 for alleged violations of the Virginia Computer Crimes Act, including accusations that Pegasystems improperly accessed Appian’s intellectual property and trade secrets.
The financial implications extend far beyond the potential judgment amount:
- Creates indefinite uncertainty that makes valuation modeling essentially impossible
- Reputational damage from accusations of corporate espionage and intellectual property theft
- Could severely impact customer relationships and employee recruitment
- The case has dragged on for years with no clear resolution timeline
Even if the company ultimately prevails, the damage may already be done. While an appeals court overruled the 2022 verdict, the Supreme Court review creates persistent uncertainty that has contributed to the stock’s significant underperformance versus the S&P 500.
Despite seemingly positive fundamentals including founder Alan Trefler’s continued 46.8% ownership stake and the company’s diversified software portfolio spanning CRM, RPA, and low-code platforms, institutional investors have concluded that better opportunities exist elsewhere.
The Supreme Court review process could extend uncertainty for additional years, during which the software industry will continue evolving rapidly around AI and automation themes that Pegasystems may struggle to capitalize on while distracted by legal proceedings.
Plug Power (PLUG)
Plug Power represents a classic example of how speculative rallies can mask fundamental deterioration and create false hope for investors in structurally challenged businesses. Despite a dramatic 69% surge in June that captured headlines, the hydrogen fuel cell company still finished the first half of 2025 down 30%, and the underlying business metrics remain deeply troubling.
The numbers are catastrophic:
- Gross margin has worsened to negative 84.03%
- Loses more than $1.80 for every dollar of revenue generated
- 2024’s staggering $2.1 billion net loss
- Revenue nearly halved in 2024
This reveals a business model fundamentally disconnected from economic reality.
The political and regulatory environment has become increasingly hostile, creating additional headwinds that could prove insurmountable:
- President Trump’s executive order halting federal funding for green hydrogen projects
- Directly threatens the company’s $1.66 billion loan guarantee
- While the One Big Beautiful Bill Act extended tax credit phase-outs until 2027, this merely delays rather than solves the company’s dependence on government subsidies
At $1.74 per share with a $2 billion market cap, Plug Power trades at astronomical multiples to any meaningful financial metric, effectively pricing in a miraculous turnaround that historical performance suggests is unlikely.
The stock’s extreme volatility and high trading volume indicate speculative rather than institutional interest, while management’s ongoing “going concern” warnings highlight the severity of the financial situation. Even recent CFO share purchases and hydrogen supply agreements cannot offset the mathematical reality that negative 84% gross margins are unsustainable.
Bottom Line
This week’s featured stocks show how different types of corporate failures can persist for years while destroying shareholder value through distinct but equally problematic mechanisms. Becton Dickinson’s serial acquisition mistakes have permanently hurt returns with no clear path to recovery, Pegasystems faces indefinite legal uncertainty that makes investment analysis impossible, and Plug Power’s fundamental business model remains economically unviable despite speculative rallies.
In each case, the mathematical realities of destroyed capital efficiency, legal overhang, or negative margins have overwhelmed any positive narratives or short-term catalysts. These situations highlight the importance of recognizing when companies face structural rather than cyclical challenges that patient capital cannot reasonably expect to overcome through management execution or market conditions alone.