The right stocks can make you rich and change your life. The wrong ones, though, can do far more damage than simply underperforming. They can erode your wealth, eating away at your hard-earned profits. These are the stocks that act as pure portfolio poison, and while not all investors like to confront this reality, it’s essential to know when to walk away.
Here are three companies that investors should reconsider holding. If you own any of these “toxic stocks,” it may be time to sell.
Walmart (WMT) – A Strong Business, But a Risky Stock at This Price
Walmart has been a standout performer over the last three years, delivering nearly 100% returns—far outpacing its retail peers. Its ability to gain market share, drive e-commerce growth, and expand profitability has made it a top pick for investors. But after such a strong run, is there still room for more upside?
Key Issues:
- Valuation is Stretched: Walmart now trades at 1.1 times sales, a sharp increase from 0.75 just a few years ago. While strong businesses deserve premium valuations, investors need to consider whether the stock has already priced in much of its future growth.
- Slower Growth Ahead? The company raised its full-year outlook in November, signaling confidence in its momentum. However, expectations are already high, and with retail spending under pressure, the upcoming Feb. 20 earnings report could be a critical test.
- Market Correction Risk: With the S&P 500 posting two consecutive years of strong gains, many analysts believe the broader market could see a pullback. If that happens, high-multiple stocks like Walmart could be among the first to cool off.
Outlook:
Walmart remains a well-run company with a dominant market position, but the stock may be too expensive to deliver strong returns from here. While long-term investors can still benefit from its growth, those looking to lock in profits after a remarkable rally may find this a good time to trim their positions.
ChargePoint (CHPT) – The Struggles Keep Piling Up
ChargePoint was once seen as a high-potential play on the EV revolution, but today it’s a cautionary tale of overpromising and underdelivering. After going public in 2021 at over $30 per share, the stock now trades around $1—a staggering collapse fueled by slowing growth, stiff competition, and continued financial struggles.
Key Issues:
- Revenue Decline in 2025: ChargePoint expects revenue to drop between 17% and 19% this fiscal year—a major red flag for a supposed growth company. Analysts forecast $416 million in revenue, well below previous expectations.
- Persistent Losses: ChargePoint remains deeply unprofitable, with a projected GAAP net loss of $270 million this year and negative adjusted EBITDA of $127 million. Its earlier target of turning EBITDA positive by 2025 is now pushed back to at least 2027.
- Competitive Disadvantage: Tesla’s Superchargers and EVgo’s fast-charging stations are rapidly gaining market share, while most of ChargePoint’s network still relies on slower, lower-margin Level 2 chargers. The company is scrambling to shift toward Level 3 DC chargers, but that transition is squeezing margins.
- Dilution Concerns: Since going public, ChargePoint has increased its outstanding shares by 59% to cover stock-based compensation and secondary offerings. More dilution is likely as the company tries to stay afloat in a tough EV market.
Outlook:
ChargePoint’s first-mover advantage in EV charging is no longer enough to justify its struggles. The combination of slowing growth, continued losses, and share dilution makes this stock one to avoid. Unless it can find a way to turn its business around, ChargePoint could continue to decline, making it a risky bet for investors.
Ford Motor Company (F) – Rising Skepticism Ahead of Earnings
Ford’s stock has been moving higher this month, but analysts are growing increasingly skeptical about its near-term outlook. The automaker has posted strong U.S. sales, yet earnings estimates have been slashed by more than 18% over the past three months, while the average price target has been cut by over 19%.
Key Issues:
- Falling Earnings Expectations: Analysts have been consistently lowering their EPS forecasts, signaling concerns about profitability. The revised estimates suggest Ford’s financial performance may not live up to recent stock gains.
- Inventory Concerns: Elevated inventory levels could pressure pricing power and margins in the coming quarters. A key driver of Ford’s 2024 strength was inventory replenishment, which won’t provide the same tailwind in 2025.
- Downgrades from Analysts: Barclays recently downgraded Ford to equal weight and slashed its price target, citing structural headwinds in the auto market. More cautious sentiment from analysts could keep a lid on the stock’s upside.
Outlook:
Ford has enjoyed a strong start to the year, but the underlying fundamentals are looking shakier. With declining earnings estimates, cautious analyst sentiment, and potential headwinds from inventory levels, this stock could be facing downside pressure. Investors looking to reduce risk in their portfolios may want to consider stepping aside before the company’s next earnings report.