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.
Supermicro (NASDAQ: SMCI)
“Reporting Woes Create Too Much Uncertainty”
Supermicro has been a key player in the AI space, benefiting from partnerships with Nvidia and other chip giants. However, the company is currently navigating serious challenges, including delays in financial reporting and the loss of its auditor. These issues have placed it at risk for a Nasdaq delisting, adding significant uncertainty to its outlook.
Although Supermicro has hired a new auditor and aims to get back on track, the damage has already taken a toll. The stock is down 28% since late August, and prominent investors like David Shaw have reduced their positions significantly. While the AI market offers long-term growth potential, the current lack of transparency and compliance concerns make this stock too risky to hold.
Until Supermicro resolves its reporting issues and regains investor confidence, it’s best to steer clear. There are better opportunities in the AI space with less baggage and greater near-term stability.
Walgreens Boots Alliance (NASDAQ: WBA)
“Too Many Risks, Too Few Catalysts”
Walgreens Boots Alliance has had a brutal 2024, with its stock plunging 65%, making it the worst performer in the S&P 500 this year. The company is struggling on multiple fronts: it’s posted losses in three of the last four quarters, slashed its dividend earlier in the year, and faces intense competitive pressures from Amazon’s push into same-day prescription delivery.
Walgreens’ healthcare clinic strategy has also failed to deliver meaningful results, and there’s growing speculation it could be abandoned altogether. While new CEO Tim Wentworth may eventually outline a turnaround plan, there’s currently no clear path to profitability or long-term growth.
With too many risks and no near-term catalysts, Walgreens remains a stock to avoid. It’s tempting to view it as a contrarian opportunity, but until management can demonstrate a sustainable strategy, the outlook remains bleak.
Palantir Technologies (NYSE: PLTR)
“Overvalued After a Parabolic Run”
Palantir Technologies has had an incredible run, with shares more than tripling over the past year and climbing 134% since September alone. While the company’s growth story is compelling—accelerating revenue, strong U.S. commercial and government business, and stellar margins—its valuation has reached sky-high levels.
Palantir currently trades at 64 times trailing-12-month revenue and 174 times free cash flow. Even if the company doubled its cash flow tomorrow, its valuation would still appear stretched. This pricing suggests that much of the optimism about its future growth is already baked in, leaving little margin for error.
Successful investing is about finding quality at a reasonable price, and right now, Palantir’s valuation makes it difficult to justify adding or holding the stock. While it’s tempting to ride the momentum, the stock’s history of volatility suggests there could be better buying opportunities down the line at more reasonable levels. For now, taking profits off the table seems like the prudent move.