Investors often turn towards blue-chip stocks when the market is in turmoil. Yet, there is no guarantee that those stocks will continue to perform when the market is down. While they do add safety and stability to your portfolio, there are many companies that one should stay away from. It is mainly due to valuation concerns, and the recent market downturn has wiped away millions from the valuation of several companies. Many stocks have valuations that are clearly unsustainable, and such stocks could drop to further lows. There are some blue-chip stocks to sell at the earliest. Nothing is over for these stocks yet, but they could disappoint you with lower-than-expected returns, which is why it is best to skip them for now.
At the top of my list is the e-commerce giant Amazon (NASDAQ:AMZN). There are several fundamental reasons to sell this stock, and one of the biggest reasons is a lack of profits. The company has minimal margins and low profits, and even the technicals do not sit well. The inflation has led to a drop in shopping, and AMZN is not the only one suffering. Plenty of retail stocks have taken a hit recently. AMZN stock lost over 30% in the past year, and there is more to Amazon’s story than the growing margins and phenomenal growth.
The idea of Amazon dominating the world seems too far-fetched today, and even Amazon Web Services (AWS) may not be able to save the company. It can benefit from cloud and retail, but this segment has massive competition. As the company gears up to report Q4 results on February 2, expect a few bumps. Invincible at one time, Amazon became vulnerable in April after it failed to meet revenue expectations and reported a loss. It missed the EPS target in the first and second quarter but beat earnings in the third quarter. However, the revenue growth is expected to be low in the fourth quarter. AMZN stock already had the worst year in 2022, and if you’re still holding on to the stock, it is time to let it go. You might not see significant returns in the short term.
Another blue-chip stock to sell this month is Netflix, Inc. (NASDAQ:NFLX). The company recently reported results and missed the earnings expectations by a considerable margin. Its earnings fell by 91% from the same quarter the previous year. It reported earnings of $0.12 per share and revenue of $7.85 billion, slightly up from $7.71 billion a year ago. Interestingly, the company added 7.66 million subscribers in the quarter, which is nothing but impressive. However, for the next quarter, the company expects growth driven by paid memberships and more money flowing through the same.
At this stage, the membership growth is saturated, and the company might not be able to meet the revenue projections of $8.17 billion. NFLX stock traded at $457 last February and dropped to $218 in April. Many investors haven’t been able to recoup the losses. Its earnings are declining and are expected to drop this quarter as well, which means holding on to the stock will not help. However, the stock is up 60% over the past six months, and this is an opportunity to sell while it is trading at a high of $360. This quarter’s positive EPS has taken the stock higher, making it a good time to sell.
Meta Platforms (META)
There has always been much controversy surrounding Meta Platforms (NASDAQ:META), and this company is not going anywhere anytime soon. However, it is losing on many grounds. Metaverse has proved to be very costly, and it is not showing the expected results. Since the company will continue to put money into this venture, the stock will remain risky for a few months to come. Metaverse might work, but it will take a lot of time and money. META stock is down over 50% in the past year and is trading close to $151 today. It is one of the blue-chip stocks to sell before it is too late.
It laid off 11,000 employees, and while it prepares to report the fourth quarter earnings on February 2, the road ahead doesn’t look smooth. Big layoffs can’t just keep the company going. Besides the growing expense towards metaverse, one of the main sources of revenue- the ad revenue has also seen a dip. Investors who believe that metaverse will work out and reward the company, there is a lot of patience and hope you need to put in there. Otherwise, it is best to stay away from META stock for now. My InvestorPlace colleague David Moadel also believes the same. When it comes to Meta Platforms, they may have an attractive valuation, but there are not only inflation concerns or rising interest rates to worry about. The company needs to work on more issues, and the path ahead might not be easy. Thus, it is among the top blue-chip stocks to sell.
On the date of publication, Vandita Jadeja 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.