Should You Sell Your Red-Hot Stocks?

  • (1:00) - Parabolic Stock Market: When Is It Time To Sell?
  • (7:35) - Tracey’s Top High Flying Stocks To Keep An Eye On
  • (22:40) - Big Takeaways On The Never Ending Growth: NVDA, CMG, WING, DPZ, PYPL


Welcome to Episode #238 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey is going solo to take a look at the booming stock market, especially the large cap growth stocks.

Some are up 100% or 200% or more just in 2020. Several are hitting new all-time highs nearly every day.

Investors who stayed in the game during the coronavirus pandemic, are now seeing that pay off.

But should you sell and cash in on the huge gains?

3 Factors to Consider

1.       Have an investing plan and know your goal. Every investor is different and has a different plan. The decision to sell may be different for a 22-year old with some shares in a Robinhood account versus the 62-year old who is nearing retirement and owns a big position in her IRA.

2.       Know your risk tolerance. It’s fun when stocks are going up every day. But what happens when there is a correction, which means a pullback of at least 10%? What if there is another bear market sell-off like in March? Every investor has to know themselves and what they can withstand.

3.       The sleep-at-night test. Yes, stocks going up nearly every day may actually be keeping some of you up every night as you worry about when the sell-off is coming or when it’s going to end. If you can’t sleep at night, nothing wrong with cashing in some profits. Profits are good.

Investors don’t have to sell an entire position. It could be cashing in 10%, or 20% or even 50% of the shares and letting the others ride.

5 Red-Hot Stocks That Keep Hitting New Highs

1.       Nvidia NVDA is the leader in the semiconductor industry. Shares are up 115% year-to-date. It’s got the earnings growth with earnings expected to rise 54.8% this year. Shares aren’t cheap, with a forward P/E of 56.8, but they haven’t been cheap for years now.

2.       Chipotle Mexican Grill CMG is up 51.3% year-to-date. It’s among the restaurant winners as consumers want healthy and they want the ease of ordering for pick-up on the app. It’s not cheap with a forward P/E of 114.7. But it’s got double digit comps and is crushing the competition.

3.       PayPal PYPL is taking advantage of the shift to online payments which accelerated during the pandemic. Earnings are expected to rise 19% this year. Shares are soaring, up 85% year-to-date. You’ll pay 53.9x for those earnings but digital is the future and PayPal is one of the top names.

4.       Wayfair W went from losing $8.03 last year to now being expected to make $1.52 this year. What a turnaround. Last quarter revenue doubled as everyone bought home furnishings and accessories while stuck at home. Sales continued to be hot into the summer months as the focus on the home continues to grip the nation. Shares have surged 267% this year.

5.       Etsy ETSY sellers sold over $300 million worth of masks last quarter, but they also sold home furnishings and gifts galore. Etsy’s marketplace shined in the coronavirus quarter. It’s expected to grow earnings by 169% this year. Shares are soaring, up 182% year-to-date. It’s a Zacks Rank #1 (Strong Buy).

What else should you know about selling your hottest stocks right now?

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
Wayfair Inc. (W): Free Stock Analysis Report
Etsy, Inc. (ETSY): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
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Zacks Investment Research

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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