Not all stocks are created equal. Some make you money. Others slowly drain your portfolio until you’re left wondering what went wrong.
The worst part? These so-called “market darlings” are often hyped up by the media, making it easy to miss the red flags until it’s too late. That’s where we come in.
We’re calling out three stocks investors should think twice about holding right now.
Walmart (WMT) – High Expectations, Slowing Growth, and Tariff Risks Could Weigh on Shares
Walmart has been a top-performing retail stock over the past five years, gaining 146% as it successfully navigated inflation, shifting consumer trends, and supply chain challenges. However, signs of weakness are emerging, making the stock vulnerable to a pullback.
- Slowing Growth: Fiscal 2025 revenue increased 5% to $681 billion, but fiscal 2026 projections show only 3%-4% growth. If tariffs disrupt supply chains and raise costs, this forecast could be further pressured.
- Expensive Valuation: Walmart’s P/E ratio has climbed to 41—well above its five-year average and far pricier than Target (TGT), which trades at just 13 times earnings. Investors have been willing to pay a premium for Walmart’s resilience, but with growth slowing, that valuation may not hold up.
- Market Risk: The stock is priced for perfection, but retail headwinds are growing. If earnings disappoint or tariffs escalate, Walmart could see a sharp correction.
While Walmart remains a strong long-term business, investors should be prepared for volatility. Taking some profits at these levels might be a smart move.
CrowdStrike (CRWD) – Slowing Growth and High Valuation Make This a Risky Hold
CrowdStrike has been a dominant player in cybersecurity, but cracks are starting to appear. Shares are up just 6% over the past year, and a weak fiscal 2026 profitability outlook has investors questioning whether the stock is worth its premium valuation.
- Growth is Slowing: Revenue grew 25% to $1.06 billion last quarter, but net dollar retention—an important metric for customer spending—declined from 119% to 112%. With post-outage retention programs coming to an end, customer spending could weaken further.
- Disappointing Guidance: For fiscal 2026, the company expects just 20%-22% revenue growth, a significant slowdown. Adjusted EPS guidance of $3.33-$3.45 came in far below Wall Street’s $4.42 estimate, largely due to higher upfront investment costs squeezing margins.
- Valuation Still Looks Stretched: At nearly 19 times forward sales, the stock remains expensive. If revenue growth doesn’t reaccelerate, that valuation could become harder to justify.
CrowdStrike is a strong company with long-term potential, but right now, the stock looks risky. With slowing momentum and high expectations already priced in, there are better opportunities elsewhere.
Costco (COST) – A Great Company, But an Overpriced Stock Facing Headwinds
Costco is one of the best-run retailers in the world, but even great companies can be bad investments at the wrong price. Shares dropped more than 6% after the latest earnings report, highlighting growing concerns about valuation and economic headwinds.
- Earnings Miss: The company posted EPS of $4.02, missing expectations by $0.09. Revenue of $63.7 billion slightly exceeded estimates, but concerns over tariffs and pricing pressure linger.
- Tariff Exposure: About one-third of Costco’s U.S. sales involve imports, making it especially vulnerable to higher costs. Management is confident in handling pricing challenges, but this remains a risk across the retail sector.
- Sky-High Valuation: Even after its recent drop, Costco trades at 53 times forward earnings—far above historical norms and significantly more expensive than other retail giants.
Costco is a fantastic company with a strong customer base, but at these levels, the stock looks overpriced. With economic uncertainty and tariff risks in play, investors may want to wait for a more attractive entry point.