The term “blue chip” tends to conjure images of stability and trust.
But, not all companies in this category are performing well enough to justify a long-term position. Pair this reality with the broader rout currently rocking global markets and knowing which blue-chip stocks to sell becomes a must.
Beyond the traditional quarterly metrics like revenue and income, keeping an eye on companies’ price-to-earnings and debt ratios can illuminate which companies may struggle to furnish earnings for investors. This is also important for investors looking to sell at the right time. It can give clues of a stock trading near its peak valuation time.
As such, investors should be wary of these three blue-chip stocks to sell as the broader market faces a correction. Furthermore, these sell recommendations don’t mean that the stock is doomed forever. Rather, it may be close to a serious correction in the near term.
Intel (INTC)
The story for Intel (NASDAQ:INTC) just seems to be getting worse. From operational incompetencies to sweeping layoffs, the company’s stock story doesn’t inspire confidence in a better future. Yet, despite all this, the company has remained a member of the Dow Jones Industrial Average, suggesting it is still considered a blue chip investment.
Depending on when you bought into INTC stock, selling now might be too much of a loss. However, in general, investors should hold off on taking a position in the stock. That’s because no matter how attractive the dip may look, INTC has a long way to go before starting the road to recovery.
Moreover, the board of directors’ decision to pay Intel’s Chief Executive Officer $16 million in compensation for 2023 while ultimately suspending its dividend serves as a stark reminder of the company’s mismanagement. Thus, investors should certainly treat INTC as one of the blue-chip stocks to sell.
Salesforce (CRM)
Trading at a P/E ratio of 42.96x, Salesforce (NYSE:CRM) has been one of the primarily overvalued stocks in the Dow for the last 12 months. Much of the excitement around CRM stock has come from the company’s proclaimed ventures into artificial intelligence. At first, this seems like a tremendous value add for a company whose products directly rely on customer data processing for enterprise efficiency. And for the first quarter of 2024, it did lead to some impressive financial increases across the board.
However, as the current market selloff intensifies and the Federal Reserve holds off on cutting interest rates, Salesforce’s ability to expand its customer base could falter. Moreover, its Einstein AI platform remains relatively unproven in its ability to improve customer efficiency. So there should be a waiting period for inventors looking to get in on the stock now. Then, we cannot ignore the streamlining layoffs of 300 employees in July. Indeed, this seems uncharacteristic for a company doing well in the Dow 30.
Boeing (BA)
Down over 30% for the year, America’s airliner king, Boeing (NYSE:BA) doesn’t have many catalysts ahead of it to raise stock value. As a result, it’s among the blue-chip stocks to sell if you haven’t exited your position yet. One primary drawback for the stock could be its upcoming National Transportation Safety Board (NTSB) hearing. Depending on how Boeing’s representatives carry themselves in the hearing, its stock could go even lower than its current price which hovers 10 dollars above its 52-week low.
Yes, the company did recently set a deadline for the return of its Starliner capsule from space. But the overall failure of the program in comparison to the successes of SpaceX’s Crew Dragon could push the government away from a long-term contract renewal. Beyond this, Boeing faces encroachment on its key markets for both wide and narrow-body aircraft from competitors like Airbus (OTCMKTS:EADSY) and Embraer (NYSE:ERJ), which are seeing increased demand in the wake of its quality control failures.
On the date of publication, Viktor Zarev 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.