For stock market investors, year’s end is a good time to review your portfolio. Making changes before the end of the year will impact your tax burden for 2024 — so now is the time to consider locking in any losses or gains so you can make the necessary trades before the end of the taxable year.
If you invest in a lot of individual stocks, this is also a great time to stare down any investments that you might want to exit regardless of the tax implications. Ask yourself if your original investment thesis still feels correct, and think about what the next year might hold. A new presidential administration, the inflation outlook, what the Fed has signaled they might do with interest rates — all of these factors and more could influence whether or not you want to keep holding your current investments.
According to investment experts, there are 10 stocks that you should definitely consider dumping before we head into 2025. If these companies are in your portfolio, take note.
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Defense Contractors
Big defense contractors have typically been pretty safe bets in the stock market, although Boeing’s struggles over the last year during a rising market clearly show that isn’t always the case. Peter C. Earle, senior economist for the American Institute for Economic Research, sees possible trouble ahead for the industry.
“Should the incoming Trump administration follow through on its pledges to force other nations to fend for themselves, the largest publicly traded defense contractors might be poised for a pullback: Lockheed Martin (LMT) and Raytheon (RTX),” Earle said.
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Renewable Energy
Earle also sees risk in the green energy sector, noting that the Biden administration’s Inflation Reduction Act provided for a large amount of subsidies for renewables. “If those are reduced or eliminated, many of the solar, wind and alternative energy source firms will be in serious jeopardy. Two of those may include Enphase Energy (ENPH) and NextEra Energy (NEE),” Earle said.
Import-Dependent Firms
Earle also noted that a cornerstone of the Trump campaign was tariffs and other forms of trade protectionism — a term for government policies that restrict international trade with the intent of helping domestic industries. Such measures are often controversial because of the unintended consequences that can arise from them.
“If tariffs of the type which have been discussed are put in place — 60%, 100%, 200% and so on — retaliatory tariffs would follow. Those could, in turn, devastate companies that rely on imports: consumer electronics firms, automobile manufacturers, medical device makers and discount retailers. Those could include, among others, Boston Scientific (BSX), Walmart, which imports 70% to 80% of its goods from Chinese suppliers (WMT) and Sony Corporation (SONY),” Earle said.
Discretionary/Luxury Consumer Goods
In an inflationary and high-interest-rate environment, businesses that sell nonessential goods and services are often negatively impacted. Derrick Fung is the CEO of Signals, an investment intelligence platform that analyzes consumer spending trends to help investors anticipate market movements. According to his data, there has been a notable down-trend in these “nice to have” products. In particular, his platform has issued a “sell” signal on stocks like Coty (COTY), Arhaus (ARHS) and Victoria’s Secret (VSCO).
You may not be familiar with fashion and beauty holding company Coty, but you are certainly familiar with their brands. Luxury brands like Burberry, Tiffany and Calvin Klein, as well as consumer brands like Adidas Covergirl all fall under the Coty umbrella. Arhaus is an online and brick-and-mortar retailer of responsibly sourced premium home furnishings. Victoria’s Secret is of course an iconic specialty retailer of lingerie and sleepwear.
“Our data has been showing a down trend on all the names above. [All of them] are based on the brand being trendy; all of the names have started to lose their appeal either to a competitor (for example, Coty to Elf Beauty, Lululemon to Alo Yoga) or the category as a whole is seeing a secular decline,” Fung said.
Exercise Caution
“Predictions have an uncanny knack for making fools of all of us. Other circumstances may arise which make any of all of these projections erroneous or irrelevant,” Earle said. It’s important to remember that predicting the future is hard to do. Be careful that you don’t overreact to trends that are ultimately fairly short term.
Earle strongly recommends that investors should speak with their financial advisor before making any major decisions on whether or not to buy, sell or hold. A professional advisor can help you make the investment moves that are right for your unique situation, regardless of what comes in 2025 or beyond.
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This article originally appeared on GOBankingRates.com: Investment Experts: 10 Stocks You Should Consider Dumping Before 2025
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
