8 Stocks to Dump Before the New Year

By Tim Lemke on 23 December 2016 0 comments

We here at Wise Bread are big supporters of long-term investing. Therefore, we don't really advocate selling stocks just because they aren't trading where you want them to be at any given moment. That said, there are times when selling some securities at year's end makes sense.

In some instances, it's time to sell an investment because they are stinkers, plain and simple. In other instances, it may be time to cut ties because there's little good news on the horizon to suggest they will grow in value in the coming year. But in other cases, it's a matter of selling at a loss in order to offset capital gains elsewhere, thus saving on your tax bill. (You can always buy these stocks back if they are still trading at low prices, as long as you wait more than 30 days.)

Here are some notable stocks and other investments that may be worth selling before the calendar turns.

1. Nike [NYSE: NKE]

Nike used to be the king of everything athletics, but it's been facing some stiff competition in recent years from Reebok, adidas, and the new biggest player, Under Armour. Nike is still a huge brand, but shares are down 17% in 2016. Sales growth has been uninspiring, margins have been shrinking, and no one really knows how low Nike will go.

2. Starbucks [NYSE: SBUX]

Starbucks is a solid company, so there's an argument to be made that you should never sell shares once you own them. But the company had a less-than-stellar year, with shares falling more than 2% in 2016, and some analysts have argued that the company is no longer in a position to see massive growth year after year. The American market is a bit saturated, and it may take time for some of the company's investments overseas to bear fruit. Starbucks could be a bargain for those who don't already own shares, but if you bought shares early in 2016, you may be able to use some losses to offset gains elsewhere in your portfolio.

3. Coca-Cola [NYSE: KO]

Yes, we know Warren Buffett, America's #1 Coke Lover, would probably have something to say about this. But the reality is that Coca-Cola hasn't had a good year, and faces continued headwinds as it looks to sell products to a populace that is growing more health conscious. Coke shares are down more than 4.5% in 2016. Sales are expected to decline next year after the company spun off most of its bottling operation. Dividends from Coca-Cola are still solid, but some say they have come at the expense of growth. All of this comes at a time when the company's CEO announced he would resign next May.

4. Anheuser-Busch InBev [NYSE: BUD]

Shares of the big beer maker are down nearly 18% in 2016 as the industry faces stiff competition from craft breweries. A-B InBev did complete its takeover of SABMiller, but it will take a while for that merger to have a positive impact. Long-term investors will probably still want to hang on to this stock, but anyone looking for a rebound in price in the short term shouldn't hold their breath.

5. The Walt Disney Co. [NYSE: DIS]

On one hand, Disney owns some very profitable theme parks and a humble movie franchise called Star Wars. But questions surround its television offerings, as cord cutters have led to declining subscriptions of its channels, most notably ESPN. Shares are down more than 1.6% in 2016 and 6% in the last 52 weeks. Disney has made some investments to take advantage of the shift from cable to streaming, but it may take time before we see if they pay off.

6. Monster Beverage [Nasdaq: MNST]

There was a time when Monster, a top maker of energy drinks, was one of the hottest stocks available for trade. But like Coke and Starbucks, the story for beverages wasn't great in 2016. Shares of Monster have fallen 13% in 2016. Some analysts say Monster will see strong sales growth as the overall market for energy drinks expands. But with a price-to-earnings ratio that's nearly 40% higher than the national average, Monster is hardly a bargain.

7. Biotech and Pharma

It just hasn't been a good year if you invested in biotech or pharmaceuticals. Companies including Gilead, GlaxoSmithKline, Pfizer, and Bristol Myers-Squibb have all posted losses in 2016. And a look at the biggest losers among ETFs and mutual funds will include a large dose of biotech and pharma. These investments are known for their volatility, so if you knew that going in, perhaps you have the stomach to ride the wave and see if things rebound in 2017. Otherwise, it may be time to cut your losses.

8. Automakers

Major car manufacturers here in the U.S. and abroad had mediocre years at best. Shares of Ford [NYSE: F] are down about 7.5%, while Toyota and Honda are also in negative territory. Auto sales aren't bad, so there's no massive risk in holding on to some of these stocks. But a tough market in Latin America and uncertainty about trade agreements under the incoming Trump administration are making investors wonder when the growth in share prices will return.

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Guest's picture
Josh

I'm pretty certain one has to be a licensed financial advisor to be able to give recommendations on specific stocks. Otherwise it could land you in a heap of trouble.