Choosing the right stocks can help you grow your wealth, but holding onto the wrong ones can be a costly mistake. Some stocks don’t just underperform—they can drain your portfolio and erase your hard-earned gains faster than you realize.
The reality is, many investors overlook the warning signs, and by the time you hear about the risks, it’s often too late. Some of these problematic stocks might even be popular names, regularly making headlines for all the wrong reasons.
We’ve put together a list of stocks that we believe you should consider selling or avoiding right now. If any of these are in your portfolio, it might be time to rethink your position before they start dragging you down.
Microchip Technology (NASDAQ: MCHP)
Time to Take Profits Amid High Valuation
Microchip Technology has had a solid run, but now might be the time to take some chips off the table. While the company’s fundamentals appear to have bottomed, the stock is currently trading at a historically high price-to-earnings (P/E) ratio, raising concerns about valuation. With the broader semiconductor sector facing a less optimistic outlook, MCHP’s premium valuation could limit further upside in the near term.
Truist Securities recently downgraded Microchip from Buy to Hold, slashing its price target from $89 to $80. This new target reflects a 24x multiple on revised 2025 EPS estimates of $3.33, down from $3.69. The downgrade highlights concerns that the recovery anticipated in 2025 is already priced into the stock, making significant gains from current levels more challenging.
Considering these valuation concerns and the tempered outlook on the semiconductor sector, it may be prudent to reduce exposure to Microchip Technology until there is clearer evidence of sustained growth.
Plug Power (NASDAQ: PLUG)
Struggling to Turn Promise into Profits
Plug Power has been making headlines with its ambitious goal to build the first commercially viable market for hydrogen fuel cell technology. However, the financials paint a much bleaker picture. In the second quarter, Plug posted revenue of $143.3 million, a significant drop from $260.1 million in the same period last year. Even more concerning is the company’s continued struggle with profitability, reporting an operating loss of $244.6 million—slightly worse than the $233.8 million loss a year ago.
Plug’s losses came in at 36 cents per share, a sign that despite deploying over 69,000 fuel cell systems and establishing more than 250 fueling stations, the company is far from being a viable business. Their projected full-year revenue range of $825 million to $925 million suggests little to no growth compared to last year’s $891 million, highlighting just how challenging the path ahead could be.
PLUG stock has tumbled 54% this year, reflecting market skepticism about the company’s ability to turn its technology into a profitable business. Until Plug Power can demonstrate a clear path to profitability, it may be best to avoid or sell this stock.
Analog Devices (NASDAQ: ADI)
Valuation Concerns and Slowing Growth Expectations
Analog Devices is another semiconductor stock that looks overvalued given the current market dynamics. The company’s fundamentals are thought to have hit a low, with a recovery projected for 2025. However, much of this anticipated growth seems to be baked into the current stock price, which is trading at a lofty 28x CY25 EPS—close to peak levels for the company.
Truist recently downgraded ADI from Buy to Hold, reducing the price target from $266 to $233, based on a 28x multiple that reflects a traditional 7x discount compared to its analog peers. Analysts note that while a significant recovery in revenue and EPS growth is expected in 2025, the market is already forecasting this recovery, leaving limited room for upside.
With the broader semiconductor sector entering a period of slower growth and ADI trading near peak valuation multiples, this could be a good opportunity to trim positions. Waiting for a better entry point or clearer growth signals could be a more prudent approach for long-term investors.