August 2, 2025
When it comes to investing, knowing when to sell is just as important as knowing what to buy. While most financial coverage focuses on buying opportunities, our research team has identified several companies facing significant challenges that investors should consider selling.
These stocks aren’t simply underperforming the market temporarily – they’re facing fundamental business problems, weakening financials, or carrying valuations that don’t match their current reality.
Our analysis isn’t based on short-term price movements or headline reactions. Each company has been thoroughly evaluated using multiple indicators that historically precede major stock declines.
Here are three stocks showing critical warning signs that demand your immediate attention:
Tilray Brands (TLRY)
Tilray Brands shows the persistent challenges facing cannabis companies attempting to achieve sustainable profitability in an oversupplied and heavily regulated market. The company’s 16% weekly decline despite posting an unusual adjusted profit highlights how even positive developments cannot overcome fundamental sector headwinds.
While Tilray achieved $20 million in adjusted net income ($0.02 per share) versus analyst expectations of a $0.02 loss, this improvement was overshadowed by declining revenue across both cannabis and beverage segments, with net revenue falling to $224.5 million from $230 million the previous year.
The most troubling aspect of Tilray’s results is the nearly $1.3 billion GAAP net loss, primarily from goodwill and intangible asset write-downs related to the 2021 Aphria merger. These massive charges reflect the industry’s dramatic valuation reset since the merger, when cannabis optimism was at its peak and acquisition prices reflected unrealistic growth expectations.
Revenue trends show persistent market share erosion:
- Cannabis revenue declined to under $68 million from nearly $72 million
- Beverage revenue fell to $65.6 million from $76.7 million
- Shows weakness across core business segments
At $0.57 per share with a market cap of $626 million, Tilray remains significantly overvalued relative to its financial performance and growth prospects. Even Jefferies analyst Kaumil Gajrawala’s $1.50 price target (implying 163% upside) failed to generate investor enthusiasm, suggesting the market has lost faith in cannabis sector recovery narratives.
The 18.50% gross margin provides minimal operational leverage, while the company’s inability to achieve consistent revenue growth after years of market development raises questions about long-term viability. With trading volume declining to 20.5 million shares versus the 32.8 million average, even speculative interest appears to be waning.
Casella Waste Systems (CWST)
Casella Waste Systems shows how acquisition-driven growth strategies can mask underlying operational deterioration and create unsustainable earnings expectations. The waste management company’s 5.29% decline following earnings reflects investor disappointment with a massive bottom-line miss despite strong revenue growth.
While second-quarter revenue of $465 million represented impressive 23% year-over-year growth, GAAP net income fell to just $5.2 million ($0.08 per share) from $7 million the previous year, dramatically missing analyst expectations of $0.33 per share.
The fundamental concern with Casella’s business model is the disconnect between top-line growth and profitability generation:
- Company completed six acquisitions in first half of 2025
- Revenue growth is largely purchased rather than organic
- This typically leads to margin compression and integration challenges
- 17.79% gross margin provides limited cushion for operational inefficiencies
Perhaps most concerning is management’s decision to lower full-year profitability guidance despite raising revenue expectations:
- Projecting GAAP net income of just $8-18 million
- Compared to previous guidance of $10-25 million
- Suggests earnings miss was not one-time but indicative of structural challenges
The dramatic earnings miss suggests management may be struggling to effectively integrate acquired assets or accurately forecast integration costs.
At $102.98 with a market cap of $7 billion, Casella trades at extremely high multiples to its modest profitability, creating significant downside risk if margin pressures persist. The elevated trading volume of 1.13 million shares versus the 438,000 average indicates institutional investors are reassessing positions following the guidance revision.
Lumen Technologies (LUMN)
Lumen Technologies shows how debt-burdened companies pursuing turnaround strategies can face extended periods of value destruction even when achieving modest operational improvements. The network infrastructure company’s 16.52% plunge following second-quarter results reveals the market’s impatience with “shrink to eventually grow” strategies when time is running short.
Despite technically beating earnings expectations with a smaller adjusted loss of $0.03 per share versus $0.13 the previous year, the 5.4% revenue decline to $3.09 billion missed analyst expectations and highlighted the fundamental challenge facing management’s transformation efforts.
The company’s enterprise business segmentation strategy appears increasingly problematic:
- “Nurture” segment declined 18% year-over-year
- This was positioned as a stable middle-growth category
- Unexpected weakness in what should be a predictable revenue stream
- Calls into question management’s ability to accurately forecast business trends
While the “Grow” segment’s 8.5% increase and surprising 2.1% growth in the “Harvest” segment provide some encouragement, the overall trajectory remains concerning given timeline pressures from the debt burden.
Most alarming is Lumen’s precarious financial position:
- $18.3 billion in total debt representing 4.9 times adjusted EBITDA
- Planned sale of 95% of consumer fiber business to AT&T will reduce leverage to 3.9 times
- Still represents unsustainable debt load for a company with persistent revenue declines
- $500 million increase in 2025 free cash flow guidance appears misleading ($400 million from one-time tax benefit)
At $3.71 with extraordinary trading volume of 44.7 million shares versus the 11.4 million average, Lumen shows classic signs of institutional abandonment. The combination of heavy debt, revenue declines, and execution uncertainties suggests waiting for either a successful turnaround completion or debt restructuring before considering investment.