As we start to think about wrapping up 2022, looking to next year and thinking about what the market will provide is exciting. Indeed, this year has been one in which simplifying and de-risking portfolios has been a profitable task. Accordingly, the search for stocks to sell is about as important as the search for value opportunities right now.
But where to start? After all, with these lower valuations comes better buying opportunities.
That’s true. However, next year could provide a continuation (or perhaps an elongation) of existing headwinds. Rising interest rates, still-high inflation, and demand pressures could weigh on even the best companies. There’s a lot to consider for investors concerned about the macro backdrop.
Thus, even companies many consider defensive companies could continue to see pressure. Let’s dive into three stocks to sell for investors looking to reduce risk in the near term.
One of the stocks I’ve generally been bullish on over the long term is Walgreens (NASDAQ:WBA). The company’s size and scale in retail speak for themselves, as do its fundamentals. This still holds for investors thinking over a multi-year time horizon.
That said, there’s reason to be cautious, even in selling mode, around Walgreens.
A company that posted only 1.2% top-line growth in its recent quarter, Walgreens is a company growth investors won’t want to consider. This company has been hit this year due to expectations that growth may continue to slow. Additionally, a shift from goods to services has been seen in the broader economy. This isn’t a great backdrop for companies like Walgreens that focus on everyday consumer goods.
Thus, for those who consider these existing headwinds to be pervasive next year, it’s hard to see why the story around WBA stock will change. This company has a strong pharmacy division, likely to provide stability. However, like other retailers, Walgreens is a stock I think could be under pressure as earnings are revised lower.
Blue Apron (APRN)
A meal-delivery kit company, Blue Apron (NYSE:APRN), surged following the onset of the pandemic. Indeed, the attractiveness of having meals delivered, rather than risking exposure at the grocery store, drove significant growth in the company’s underlying business. Over time, many expected this growth to continue.
A pioneer in this space, Blue Apron has been at the meal kit game for a decade now. As of 2017, the company captured roughly 40% of the market. However, that market share number recently has come down to 9%.
Thus, it’s not only a post-pandemic decline facing Blue Apron, but an increasingly competitive environment with investors worried. This company has a bare-bones marketing budget of only $21 million, with competitors like HelloFresh (OTCMKTS:HELFY) putting more than $500 million into growing its business. For those thinking about Blue Apron’s growth prospects in this environment, it’s not looking good right now.
Gold Fields (GFI)
Gold has always been the friend of long-term investors. One of the best ways to protect wealth against inflation pressures still holds today. And there are plenty of gold miners to consider in this space. That said, Gold Fields (NYSE:GFI) is one of the stocks to sell in this space.
Yes, the price of gold isn’t as high as many investors would like it to be. And all valuations across this sector are tied to the price of gold. However, compared to many of its larger peers, Gold Fields has underperformed. This is a gold miner, which is down more than 24% on a year-to-date basis.
Much of this has to do with the company’s recent results. For the first half of this year, the company brought in revenue of $2.2 billion. That’s a 13% jump year-over-year, which has left some investors wanting more. Additionally, the company’s pending acquisition of Yamana Gold has pressured this stock lower, given the premium paid for this deal. Investors worried about combination risk may want to look at other top gold miners in this space as we head into 2023.
On the date of publication, Chris MacDonald 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.