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The stock market offers a plethora of investment opportunities at the tips of your fingers. With a few clicks, you can have exposure to a company by placing a market order through your brokerage account.
However, publicly traded corporations do not come with cautionary signs. It is imperative to conduct your due diligence to determine if an investment aligns with your portfolio.
Some stocks are inclined to diminish shareholder value rather than yield profitable returns. Here are three stocks to consider selling in April before losses accrue.
Heading Towards a Deterioration: Plug Power (PLUG)
Source: Mark R. Hake, CFA
Plug Power (NASDAQ:PLUG) focuses on hydrogen fuel cell systems as an alternative to gas-powered engines. The company, amid the green movement, experienced a staggering 2,000% surge from 2020 to 2021. However, the stock has plummeted by 70% in the last year.
The speculative EV stock continues to fall short of EPS projections while grappling with losses. With a net loss of $642 million in the quarter and a mere 0.64% revenue growth year-over-year (YoY), long-term investment prospects appear bleak.
Despite potential gains from speculative trading and a looming short squeeze, Plug Power falls short as a lasting investment option. In a market teeming with growth stocks boasting expanding profit margins and enticing growth outlooks, taking such substantial risks seems unnecessary.
It seems unlikely that Plug Power will reclaim its peak. Growth stocks reliant on escalating net losses heavily hinge on significant revenue upsurges to stay relevant. With stagnant YoY revenue and mounting losses, this stock is one to steer clear of.
Crypto Conundrum: Coinbase (COIN)
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Coinbase’s (NASDAQ:COIN) stock trajectory heavily relies on Bitcoin (BTC-USD). The recent introduction of Bitcoin ETFs has been advantageous for the brokerage firm, witnessing a 44% surge year-to-date. Many companies rolling out ETFs are utilizing Coinbase for their crypto storage.
Despite the hype, Coinbase stock poses significant risks at current levels. Trading at a forward P/E ratio of 208 assumes Coinbase maintains its current growth pace, an assumption likely unsustainable. The brokerage entity currently rides a wave of renewed enthusiasm for crypto investments and substantial investments from financial institutions in crypto ETFs.
Coinbase showcased several quarters of meager revenue growth or YoY declines before achieving standout Q4 2023 results. Despite a strong finish, there was a slight YoY revenue dip. Coinbase’s present valuation leaves no margin for error, especially in the erratic realm of crypto.
Game Over? Electronic Arts (EA)
Reinventing Electronic Arts: A Financial Road Less Traveled
Electronic Arts in a Monetization Maze
Electronic Arts (NASDAQ:EA) resides in a realm where the clash between aggressive monetization strategies and tepid investor returns is the norm. Over the past five years, EA’s stock has seen only a modest 31% uptick, with a current year-to-date downturn of 4%. It’s as if the company’s financial sails have caught a faint breeze, barely propelling it forward in the eyes of investors.
The Stingy Stance: Financial Fragments
Trading at a price-to-earnings (P/E) ratio of 33 and offering a dividend yield of just 0.59%, EA’s reluctance to fulfill investor expectations mirrors its cautious approach in the gaming sphere. The absence of a dividend hike for two consecutive years hints at a conservative financial stance that seems justified when delving into EA’s financial realm.
Stagnation Amidst Slow Growth
The third-quarter fiscal year 2024 report offers little solace to investors seeking robust growth. Revenue growth registered a mere 3% year-over-year (YoY), a lackluster performance when juxtaposed against the company’s elevated P/E ratio. While net income saw a 42% YoY surge, this burst is encumbered by the meager trajectory of revenue expansion, leading to uncertainty about sustainability.
A Cautionary Tale
For investors eyeing Electronic Arts, a word of caution may linger in their minds. The allure of other gaming stocks outshining EA’s potential might beckon, nudging them away from a company grappling with financial dynamics that fall short of market expectations.
