Smart investors know that knowing when to sell is just as important as knowing what to buy.
While most financial media focuses on stocks to purchase, we look for companies facing serious problems that might make them worth selling. These aren’t just stocks that are temporarily underperforming – they’re businesses facing real challenges with their operations, finances, or that are simply overvalued.
We don’t make recommendations based on short-term price movements or news headlines. Each company on this list has been carefully analyzed using multiple factors that often predict significant price drops.
Good portfolio management means both buying and selling at the right time. Often, the best decision is to move your money away from troubled positions before problems show up in the stock price.
Current Sell Candidates:
Easterly Government Properties (DEA)
Easterly Government Properties delivered a troubling announcement to investors with both a reverse stock split and a significant dividend cut, triggering a nearly 14% single-day decline. The REIT’s decision to implement a 1-for-2.5 reverse stock split effective April 28, combined with reducing its quarterly dividend by almost $0.09 per share from $0.27 to $0.18, signals serious problems despite management’s attempt to put a positive spin on the news. These defensive financial moves typically indicate a company in trouble rather than one positioned for growth.
The company’s stock is trading at just $8.26, down from its 52-week high of $14.53 and approaching its low of $7.79. Easterly has lost substantial value while its modest $903 million market value still seems potentially too high given these developments. While the current 12.68% dividend yield might look attractive, this number is misleading since it reflects the soon-to-be-reduced payout. After the cut, the yield will be significantly lower, removing a key reason many investors hold the stock, especially in a rising interest rate environment that’s already challenging for REITs.
Particularly concerning is the sharp drop in trading volume to just 251,136 shares compared to the 1,647,290 average, suggesting many investors may not yet be aware of these negative developments. The company’s 34.29% profit margin provides limited protection if occupancy rates or rental income decline. With management using financial tricks like the reverse split rather than addressing real business challenges, investors should consider whether Easterly can effectively compete for capital in an increasingly selective REIT market. The combination of reduced income and the negative perception of reverse splits creates a strong case for investors to reconsider their positions before these developments potentially cause additional selling pressure.
Newsmax (NMAX)
Newsmax shows the dangers of meme stock mania, with shares dropping 10% on Friday despite the broader market rallying and the company announcing a contract extension with host Greta Van Susteren. The stock’s wild swings – moving from up 13.4% to down 10% in a single day – reflect speculative trading rather than actual business performance. Since its March 31st IPO, the stock has experienced extreme volatility, already falling dramatically from its peak of $265 to the current $27.95 level, yet still looking significantly overvalued based on fundamental metrics.
The financial reality of Newsmax presents a stark contrast to its market value. With annual revenue of just $171 million against a market value of approximately $3 billion, the stock trades at a steep 17.2x sales multiple despite posting a substantial $72 million net loss last year. This disconnect is particularly concerning given the company’s likely challenges in maintaining its 26% annual revenue growth as the 2024 election cycle benefits fade. The zero percent profit margin reported in its financial data further highlights the fundamental business challenges that remain even after the stock’s significant drop.
Trading volume has declined significantly from its post-IPO peak, with current volume of 2.3 million shares well below the 6.15 million average, suggesting the initial wave of speculative interest is fading. Without a dividend to support the share price and lacking a clear path to profitability, Newsmax appears likely to fall further as investors increasingly focus on fundamentals rather than momentum. Even after declining nearly 90% from its peak, the current valuation remains difficult to justify for a company with material losses and facing likely revenue slowdown in a non-election year. For investors who bought shares during the initial meme-stock frenzy, the time for exiting positions at reasonable prices may be quickly closing as the stock moves toward valuations more aligned with its financial reality.
Booz Allen Hamilton (BAH)
Booz Allen Hamilton faces increasing problems as the Department of Defense implements significant budget cuts that directly target the company’s core business. Secretary of Defense Pete Hegseth’s announcement of $5.1 billion in Defense Department cuts specifically identified Booz Allen among the consulting contracts being eliminated. With the company getting virtually all of its revenue from government contracts, this direct mention in cost-cutting initiatives signals a fundamental shift in the company’s growth prospects that the market is only beginning to understand.
The financial implications are concerning despite the stock’s decline from its 52-week high of $190.59 to the current $110.88 level. Goldman Sachs analyst Noah Poponak’s decision to cut his price target from $150 to $109 reflects growing recognition that previous optimistic assumptions about the company’s positioning in AI and cybersecurity may have been overly hopeful. Poponak explicitly warned of “risk to estimates as results are reported in the coming quarters,” suggesting the full impact of these contract reductions has yet to be reflected in forecasts or the current share price.
What’s particularly troubling is the company’s limited business beyond government contracts, leaving it especially vulnerable to shifting political priorities. While the stock’s 22.27% profit margin provides some buffer, the modest 1.86% dividend yield offers minimal compensation for increasing business risks. Despite a substantial 42% decline from its peak, Booz Allen’s $14 billion market value may still be difficult to justify as Defense Department consulting budgets face continued pressure. With trading volume significantly below average (275,837 vs. 2,829,387), suggesting many investors remain unaware of these developments, the stock appears vulnerable to further declines as the magnitude of these contract losses becomes more widely understood in upcoming earnings reports.