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3 Stocks We're Ready to Sell

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If NVIDIA was overvalued in April, it's doubly so today. At $53 per share, NVIDIA is priced for a level of growth that will be difficult for the company to achieve. NVIDIA dominates the PC graphics card market, shipping nearly 80% of discrete graphics cards in recent quarters. But further market-share gains will be tough, particularly with rival Advanced Micro Devices launching new cards this year.

NVIDIA's growth businesses, which include data center and automotive, are growing at an impressive rate. But these businesses still represent a small portion of NVIDIA's total revenue, and they'll need to grow rapidly for years to come before they start driving the company's growth. Competition in both areas will almost certainly increase, particularly in automotive, where a variety of companies are looking to stake their claim in the self-driving car of the future.

Nvda Chip Big

Image source: NVIDIA.

NVIDIA generated $614 million in net income last year, putting the price-to-earnings ratio at nearly 47. The company's licensing deal with Intel , which brought in $264 million last year, will stop contributing revenue after the first quarter of fiscal 2018, which ends early next year. A significant chunk of NVIDIA's profits could disappear if a new deal isn't reached. With a nosebleed valuation and the potential for a major hit to earnings next year, NVIDIA will need to put up some pretty incredible growth in order to justify its price tag. If I still owned the stock, I would sell it.

Cashing in on a closed-end fund

Dan Caplinger: I've always been a big fan of closed-end funds because you can often get discounts to net asset value for investments in stocks, bonds, and other asset classes. Yet the big plunge in bond-market yields has sent bond prices through the roof, and that has me looking hard at municipal-bond closed-end funds like Nuveen Municipal Value (NYSE: NUV) .

The performance of muni closed-ends has been extremely strong, with Nuveen Municipal Value climbing almost 16% in just the past year. Much of that gain has come from the elimination of what had been a discount to net asset value, and now, the closed-end and many of its peers in the industry are trading at premiums to net asset value. When that happens, it makes more sense to look at regular open-end mutual funds, which always trade right at net asset value.

Nuveen Municipal Value trades at just a 1% premium to net asset value right now, so it isn't necessarily a pressing matter to sell immediately. But if you hold similar closed-end funds in the municipal or regular bond space, be sure to take a look and see if premiums have gotten more out of hand. If that's the case, you can reap the rewards by selling and looking for areas where discounts still prevail.

A secret billion-dollar stock opportunity

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Dan Caplinger has no position in any stocks mentioned. Jason Hall owns shares of Intel and The Container Store Group. Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA and The Container Store Group. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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