Despite the overall positive market conditions, it’s advisable to consider selling certain stocks. The S&P 500 Index and the Nasdaq Index have performed well in the first half of 2023 with technology stocks leading the way. However, the market rally is expanding to include other sectors. With the Federal Reserve approaching the end of its interest rate hikes and the economy showing resilience, the rally is expected to continue.
Nevertheless, investors should exercise caution and evaluate stocks based on their financial performance and profit-taking opportunities. Here are three stocks to consider selling in July.
Let’s kick off this list with a controversial pick, shall we?
Despite its impressive market capitalization and stock performance, Apple (NASDAQ:AAPL) is facing many potential challenges. This has led me to trim my position, though I’m still holding AAPL for the long-term.
Indeed, at some point, even the best companies receive valuations that don’t make sense. That’s what I think is taking place with Apple right now.
Supply chain issues, including production forecast cuts for its upcoming mixed-reality headset, the Vision Pro, could impact the company’s performance. While the headset’s initial launch is geared towards developers and the revised forecast represents a small portion of Apple’s revenue, these issues raise concerns for the company’s future prospects.
Apple faces significant risks due to its reliance on intricate supply chains and shipping routes, as highlighted by production cuts. Additionally, Apple’s consumer banking initiatives have encountered issues, including partner Goldman Sachs seeking to exit their joint high-yield savings venture. This turbulence in diversifying revenue streams. Although coupled with the potential risks of expanding into short-term consumer loans, present challenges for Apple’s future growth.
While the future of AAPL stock remains uncertain, it is worth noting that stocks often experience a consolidation phase after a significant rally. Shareholders may consider reducing their position and taking profits, especially since the median price target among analysts is slightly below the current share price. As a result, Apple’s stock could potentially stall or even decline in the coming weeks.
AMC Entertainment (AMC)
AMC Entertainment (NYSE:AMC) faces significant challenges as the cinema industry struggles to compete with various modern viewing options. The company’s declining patronage and substantial debt of over $4.8 billion highlight the hurdles it must overcome. In the first quarter, AMC’s sales were a disappointing 21% lower than pre-pandemic levels, indicating the difficulties it faces in recovering its former glory.
AMC’s declining business prospects and false revenue growth are cause for concern. The movie theater industry has faced significant changes, with viewers now having more options than before. Although revenues increased in the first quarter, it is primarily due to lingering Covid-19 effects rather than a true turnaround.
AMC faces significant challenges with its massive debt and struggling box office sales. Despite some recovery in theater attendance, first-quarter revenues remain 25% lower than pre-pandemic levels. The rise of streaming services and changing consumer habits add to the complexity. While a potential comeback is possible, AMC has lost its status as a meme stock and experienced a significant stock price decline. Volatility is expected to persist in the future.
Mullen Automotive (MULN)
Mullen Automotive (NASDAQ:MULN) has suspended investor financing for the remainder of 2023. Despite their claims of fiscal strength, the company’s stock has plummeted from $3.25 to just 11 cents this year. With a significant increase in operational losses year-on-year, Mullen’s prospects appear uncertain.
Mullen’s stock is currently trading at less than 12 cents per share and is at risk of being delisted from the Nasdaq Composite. The company has been diluting its shares and recently announced a potential resale of up to 2.33 billion shares. Mullen’s poor performance is reflected in its “F” grade in the Portfolio Grader.
Despite the hype from r/WallStreetBets, Mullen Automotive’s stock has experienced a sharp decline of 85% in the past month. The company’s efforts to generate confidence through partnerships and deals in the EV market have not been successful. MULN stock remains below $1, reflecting a loss of over 90% in value over the past year. It is advisable to sell MULN stock while there is still an opportunity.
On the date of publication, Chris MacDonald has a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.