The future of the United States economy appears surprisingly resilient, as evidenced by positive trends in labor force participation, inflation and wages. Despite earlier concerns of long-term scars, the nation has shown remarkable recovery, challenging prevailing pessimism. While challenges persist, the overall state of the economy and society seems more favorable than anticipated. Because of this news, get out of your over-valued positions that are up more than 500% and diversify. Drop these three stocks to sell and maximize profits elsewhere.
Carvana Co. (CVNA)
Carvana Co. is an online used-car retailer. It is an early mover into the online car retail space and is a household name. However, there are many underlying issues with this company.
Carvana was up 1043.41% in 2023. However, its financials aren’t strong enough to justify its evaluation. While it has consistently beat earnings estimates, Carvana has an EBITDA of $-153 million. It carries a debt of $6.44 billion, yet only has $920 million in cash. Along with this, Carvana’s return on equity is -1,268.60%. This indicates a lack of profitability and earning potential.
It is important to note that Carvana’s business is heavily dependent on extraneous factors: interest rates, the price of new cars and the price of used cars. The Federal Reserve lowering interest rates makes it more viable for consumers to take out car loans, leading to an increased number of new cars sold and thus lowering Carvana’s market base. Additionally, the once-inflated used car market is starting to deflate with prices coming down, impacting Carvana’s profit margin.
The combination of lackluster financials, and increased macroeconomic changes that will prove detrimental to Carvana’s success. It is fair to say that at this moment, it is a stock investors should consider selling.
Jin Medical International (ZJYL)
Jin Medical International Ltd (NASDAQ:ZJYL) is a holding company specializing in designing and manufacturing wheelchairs and living aid products for people with disabilities, the elderly and those recovering from an injury.
Just going public in March 2023, ZJYL, up 3,020.1%, was ranked first among the best-performing stocks in the year 2023 among companies that traded on major U.S. exchanges, and had market capitalizations of at least $1 billion. However, its financials have been questionable, experiencing relatively low growth in the past five years. For instance, its revenue has only increased by 3.93% from $19.19 million in fiscal year 2022 to $19.976 million TTM. Moreover, it has decreased by 4.78% since 2018, falling below average for companies within the medical equipment industry.
Additionally, because of the increase in its share price, both ZJYL’s P/S ratio and P/E have soared to a staggering 94.05 and 622.05 respectively. This indicates high expectations for the company to do well. However, considering its sluggish growth compared to the rest of the industry, predicting if the company will meet these expectations is risky, especially when its most recent earnings report dates back to March 2023. As a result, this is a compelling entry on our list of stocks to sell.
Marathon Digital Holdings (MARA)
Marathon Digital Holdings Inc. (NASDAQ:MARA) is a digital asset technology company that specializes in mining digital assets with a specific emphasis on the blockchain ecosystem and the generation of digital assets.
Marathon Digital Holdings was one of the best-performing stocks in 2023, up 586.8%. However, its financials have been questionable. Although its revenue has increased substantially since 2020 by 98.31%, other areas have been constantly negative during the same period. Currently, MARA’s gross profit is -$41.189 million, its operating income is -$116.949 million, and its operating cash flow is -$317.22 million. In addition, the company has a debt of $325.8 million yet only carries $101.2 million in cash. As a result, this results in a profit margin of -133.72%, signifying poor profitability.
And, because the company engages in cryptocurrency, it operates in an extremely volatile market, particularly Bitcoin. If Bitcoin’s value decreases, then MARA’s stock will too decrease. In addition, Bitcoin is “halving” in 2024 where the reward for mining is cut in half, which may result in higher costs of mining and losses for MARA if Bitcoin’s value does not increase tremendously. As a result, this stock is a high-risk, high-reward investment option and is compelling to sell for investors who are unwilling to undergo the risk. If you want a strong portfolio this year, drop these stocks to sell.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article