2021 was a stunning year for the stock market. While there were some volatile moments, stocks closed out 2021 with a bang. The S&P 500, Dow and NASDAQ ended the year up a whopping 26.9%, 18.7% and 21.4%, respectively.

The same can’t be said for 2022. Instead of rallying to new record highs, the S&P 500 and Dow fell below 10% and into correction territory. The tech-heavy NASDAQ took it a step further, plunging more than 20% in the first quarter and entering bear-market territory.

The market analysts at Bespoke have noted that the S&P 500’s performance so far in 2022 is one of the worst 10 starts to a year since 1928.

Now, I fully expect the stock market will bounce back over time. However, not every stock will bounce with it. We’re in an environment where it’s every stock for itself. There are both multinational blue-chip stocks and popular small-cap growth stocks that are not going to be winners this year.

I like to say that good stocks bounce like fresh tennis balls and bad stocks bounce like rocks. So, in this special report, I’d like to highlight 13 “rocks” that might be lurking in your portfolio and should be considered immediate sells. Several of which were big winners during the pandemic… but are now set for a fall.

Let’s take a look…

Stock to Sell #1: Chewy Inc. (CHWY)

If you have a pet, you’ve likely used Chewy Inc. (CHWY), the one-stop online pet shop. It offers a variety of pet products, including food, toys and even pharmaceuticals, all of which can be delivered to your door.

Chewy was a big winner in 2020, ending the year up 210%. The reality is most folks were stuck at home, so they turned to pets for companionship. As a result, the pet industry skyrocketed, blowing past $100 billion in total sales for 2020. Chewy benefited from that pet industry growth, as it saw its revenue increase 47% year-over-year to $7.15 billion in 2021.

However, now that the lockdowns are lifted and folks started to get active again, Chewy’s growth is hitting the brakes. For the company’s fourth quarter in fiscal-year 2022, analysts expect revenue to rise 18.5% year-over-year to $2.42 billion. However, they also forecast an earnings per share loss of $0.09, which is down significantly from earnings per share of $0.05 in the same quarter a year ago.

Stock to Sell #2: GameStop Corp. (GME)

The FOMO (“fear of missing out”) investors of the past few years must have enough bravado to “buy high” and believe they can sell even higher later. Seasoned investors sometimes scorn this practice as the “greater fool strategy,” because its success relies on a “greater fool” paying an even higher price than what the earlier investor paid.

But “great fools” can profit handsomely during manic stock-market phases. Gains arrive so effortlessly that investing seems as “easy” as boiling water. The easier it becomes, the more folks like to chat about the next “hot stock.”

The WallStreetBets crowd on Reddit is one prominent example. This community chats 24/7 about the next hot stock to buy. And as we saw in early 2021, the “buzz” from WallStreetBets was more than enough to launch GameStop Corp. (GME)shares into the stratosphere… at least temporarily.

However, GME shares fell back to Earth in early 2022, and it’s not really a big surprise as to why. For its fourth quarter, the company reported an earnings-per-share loss of $0.87. Analysts were expecting earnings per share of $0.84, so the company missed earnings expectations by a whopping 321.4%. Looking forward to the first quarter, analysts forecast an even wider earning per share loss. They’re calling for an earnings per share loss of $1.45, compared to an earnings per share loss of $0.45 in the same quarter of last year.

Stock to Sell #3: DocuSign, Inc. (DOCU)

DocuSign, Inc. (DOCU) developed e-signature technology in 2003. Eliminating the manual paper process gives companies faster turnaround times, limits errors and reduces expenses. Through DocuSign’s cloud-based platform, companies can develop, upload and send agreements to all stakeholders for electronic signatures. 

DocuSign’s platform grew in popularity amid the global pandemic, which resulted in a huge boon for the share price – DOCU surged 205% in 2020. However, the stock’s momentum hit the brakes in 2021 as its earnings and sales momentum began to slow. For its fourth quarter in fiscal year 2022, the company reported earnings of $0.48 per share on revenue of $580.8 million. For full-year 2022, revenue rose 45% year-over-year to $2.1 billion.

While the revenue results surpassed analysts’ estimates for revenue of $561.6 million, it’s DocuSign’s guidance for 2023 that’s the problem. Company management guided for first-quarter revenue in fiscal year 2023 between $579 million and $583 million and for full-year revenue to be between $2.47 billion and $2.482 billion.

Stock to Sell #4: Netflix, Inc. (NFLX)

Netflix, Inc. (NFLX) is an online video streaming service that provides countless movies, TV shows and documentaries. All video content can be streamed commercial-free anywhere and anytime of the day through the Netflix app. All you need is an internet-connected device, such as a mobile phone, television, gaming console, tablet or computer.

2020 was a record-breaking year for Netflix. It brought in 37 million subscribers and broke above 200 million subscribers worldwide. The reality is Netflix provided entertaining content to preoccupy folks while the world was shut down. So, when COVID-19 restrictions were lifted and folks were able to go out again, Netflix’s growth slowed down significantly.

In Netflix’s fourth quarter of fiscal year 2021, it brought in earnings of $1.33 per share on revenue of $7.71 billion. The issue, however, is that subscriber growth fell short of the company’s initial forecast. Netflix had guided for 8.5 million new subscribers. It missed its own expectations, bringing in 8.28 million new subscribers. In addition, the company provided a weak forecast for its first quarter in 2022, as the company only expects to add 2.86 million new subscribers.

The stock plunged in the wake of disappointing results, and it has since given up all of its gains since the beginning of the pandemic. It also fell to a new 52-week low in mid-March 2022. Looking to the first quarter, the analyst community consensus is for earnings to drop 22.7% year-over-year to $2.90 per share on revenue of $7.94 billion.

Stock to Sell #5: Nio Inc. (NIO)

Many leading companies in the electric vehicle (EV) and energy storage sector are losing money. The Chinese EV company Nio Inc. (NIO) is one high-profile example, but it’s hardly alone.

According to calculations from FT Alphaville, a representative selection of 23 EV manufacturers, nine battery/cell producers and nine charging-station businesses recently reached a staggering combined market value of $1.6 trillion.

Incredibly, only six of these 41 EV companies managed to generate a gross profit over the last 12 months. The other 35 lost money. According to a recent article on Nio, the company “lost 6 cents a share while revenue soared 117%. But the startup gave a weaker-than-expected fourth-quarter revenue outlook, saying chip shortages and production challenges continue.”

Nio has been struggling to maintain momentum in comparison to other like companies and is still losing money. In its most recent quarter, the company reported an earnings-per-share loss of $0.21. While some investors hold out hope for positive earnings numbers, delivery growth has slowed down year over year.

At best, they may meet expectations, but that won’t help Nio recover from the fact that it’s lacking where its competitors or thriving. So, it’s not surprising that NIO is expected to report an earnings loss of $0.13 per share on a 6.8% year-over-year increase in revenue to $1.32 billion.

Stock to Sell #6: Novavax, Inc. (NVAX)

Novavax, Inc. (NVAX) was a big COVID-19 vaccine play. The biotech company is known for developing vaccines for the toughest viruses in the world – and its COVID-19 vaccine has been receiving approvals around the world. In fact, it has received emergency-use authorization in Indonesia and the Philippines, and it has been approved in the European Union and Australia. The company has also submitted its vaccine for approval in Japan and India.

Unfortunately, Novavax has yet to receive U.S. Food and Drug Administration approval for its COVID-19 vaccine here in the America, and the delay has had a negative impact on the company. In Novavax’s fourth quarter, the company reported hideous earnings and sales results. Specifically, an earnings loss of $11.18 per share and sales of $222.2 million. This was well below analysts’ expectations for an earnings loss of $1.80 per share and revenue of $331.79 million.

NVAX has trended lower so far in 2022, down nearly 50% year-to-date and more than 70% off its 52-week high of $277.80. Even if the company does receive FDA approval for its COVID-19 vaccine, Moderna, Inc. (MRNA) and Pfizer (PFE) have already taken a fair share of the available COVID-19 vaccine market.

Stock to Sell #7: PayPal Holdings, Inc. (PYPL)

PayPal Holdings, Inc. (PYPL) offers easy, affordable, safe and reliable financial services. Primarily, PayPal is known for its online digital payments platform that allows users to send and receive money electronically. With PayPal, folks can instantly transfer money to others with the PayPal mobile app, shop online and make donations to their favorite charities.

PayPal hummed along during the pandemic as more folks used its platform to shop online. In 2020, earnings rose 31% to $3.88 per share, and then 18% in 2021 to $4.60 per share. However, that growth is slowing, as earnings are only expected to rise 1% in 2022. I should add that, for the first quarter, earnings are expected to slip about 28% year-over-year to $0.88 per share, which is down from earnings of $1.22 per share in the same quarter of last year. Revenue is expected to increase 6.3% year-over-year to $6.41 billion.

Not only is the stock trading well below its pandemic highs, but it also fell to a 52-week low of $92.25 in early March 2022.

Stock to Sell #8: Peloton Interactive Inc. (PTON)

Now that the severity of the pandemic is waning, home-centric stocks are all suffering in some way – one of which being Peloton Interactive Inc. (PTON). The high-tech exercise machine company’s stock is down more than 70% from its 52-week high of $129.70, and despite trying to make a comeback last summer, the stock suffered a crash that obliterated that progress in October 2021, when it was reported that the company was “temporarily stopping production of its products, and they were halted for volatility multiple times.”

The culprit? Consumer demand dramatically decreased, due to the fading of the pandemic. According to the CNBC article published at the time, the company was “now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships.”

That decrease in demand has weighed heavily on Peloton bottom line. For its second quarter in fiscal year 2021, Peloton reported an earnings loss of $1.39 per share on revenue of $1.1 billion. The analyst community was calling for an earnings loss of $1.21 per share, so the company missed estimates by 14.9%. The analyst community is just as pessimistic for Peloton’s second quarter. Currently, analysts are projecting an earnings loss of $0.83 per share on revenue of $972.88 million.

Stock to Sell #9: Roku, Inc. (ROKU)

Roku, Inc. (ROKU) is a television streaming platform, with smart televisions and devices that enable users to stream content from streaming services to your television. This includes Netflix. And much like Netflix, Roku was very popular during the pandemic. In 2020, it brought in 13.7 million active users. In its first quarter of 2020, Roku saw a 49% rise in streaming hours. The stock also surged during the pandemic – climbing nearly 150% in 2020.

And again, similar to Netflix, the company’s growth hit the brakes after folks turned off their streaming services and went back outside. Roku posted a disappointing fourth quarter for its fiscal year 2021 that missed on the top and bottom lines. Revenue climbed 33% year-over-year to $865.3 million, which was well below analysts’ expectations for revenue of $894 million. It was also slower than the 51% year-over-year revenue growth the company experienced in its third quarter.

For the first quarter in fiscal year 2022, company management expects revenue of $720 million, which was also short of the analyst consensus for $748.5 million. While earnings of $0.17 per share topped estimates by 88.9%, analysts expect earnings to slow dramatically in the first quarter. Currently, the earnings estimate stands at an earnings loss of $0.17 per share, which is down significantly from earnings of $0.54 per share in the same quarter of 2021.

Stock to Sell #10: Starbucks Corporation (SBUX)

Starbucks Corporation (SBUX) is a coffee-shop giant, with more than 32,000 coffee stores worldwide. And there’s plenty of demand for its product: More than 1 billion people worldwide drink coffee every day. Americans alone drink about 400 million cups of coffee daily.

However, Starbucks is feeling the pressure of surging inflation, which was revealed in its earnings results for its first quarter in fiscal year 2021. The company reported earnings of $0.72 per share on $8.1 billion in revenue. Analysts were expecting earnings of $0.80 per share on $7.95 billion in revenue, so Starbucks posted a 10% earnings miss and a slight revenue surprise.

CEO and President Kevin Johnson noted, “Although demand was strong, this pandemic has not been linear, and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to Omicron and a tight labor market.”

For the second quarter in fiscal year 2022, analysts are calling for earnings to dip 1.61% year-over-year to $0.61 per share, down from $0.62 per share in the same quarter of 2021. Revenue is expected to come in at $7.62 billion. Given that inflation will persist for the near future, it will likely impact Starbucks’ growth in the near term.

Stock to Sell #11: Spotify Technology SA (SPOT)

Spotify Technology SA (SPOT) is one of the largest music streaming platforms in the world, with 406 million users. Launched in 2008, the company allows users to stream music and podcasts with free and subscription-based listening options.

For its 2021 fourth quarter, reported on Feb. 2, 2022, total active users increased 18% year-over-year to 406 million and paid-subscriber growth rose 16% year-over-year to 180 million. Total active user growth was in line with analysts’ expectations, but paid-subscriber growth fell short of analysts’ estimates for 181 million paid subscribers.

I should add that much of SPOT’s growth in the most recent quarter came from places like India, Indonesia and Latin America, where average customers have less money to spend.

Looking ahead to SPOT’s first quarter in fiscal year 2022, the company expects 418 million total users, which missed analysts’ forecast for 422 million total users. In addition, company management noted that it will no longer provide annual guidance.

The weaker-than-expected first-quarter guidance coupled with SPOT’s decision to pull its future guidance triggered a wave of post-earnings selling in the stock. On Feb. 3, 2022, the stock fell nearly 17% and has continued to trend lower ever since.

In an environment where future guidance is an important factor in a stock’s performance, SPOT shares will have trouble bouncing back as long as the company keeps Wall Street in the dark.

Stock to Sell #12: Teladoc Health, Inc. (TDOC)

Teladoc Health, Inc. (TDOC) offers virtual doctor appointments and videoconferencing. In other words, its customers can meet virtually with their doctors from the comfort of their own home. So, it was a great alternative for folks with medical issues who couldn’t go to the doctor’s office during the pandemic.

As a result, Teladoc’s business exploded. For full-year 2020, revenue surged 98% year-over-year to $1.094 billion. Total visits rose 156% year-over-year to 10.6 million. The company is still expected to grow at a steady clip in its first quarter in fiscal year 2022, with analysts expecting a smaller earnings loss of $0.57 per share, compared to an earnings loss of $1.31 per share in the same quarter a year ago. Revenue is expected to climb 26% year-over-year to $569.58 million.

But the reality is that in-person doctor visits are not going away. Folks still need to go into the office for bloodwork, surgeries, physicals and the like. So, the company won’t be able to sustain the tremendous growth it saw in 2020 with more doctors’ offices reopening and folks being more comfortable leaving home.

Stock to Sell #13: Zoom Video Communications, Inc. (ZM)

Zoom Video Communications, Inc. (ZM) is a leading provider of online video and audio conference calls, as well as collaboration, chat and webinar tools. As a result, its services were wildly popular during the pandemic. In fact, Zoom achieved a significant milestone during its second quarter in fiscal year 2022, reporting its first quarter of more than $1.0 billion. The company also noted that it had more than 500,000 customers around the globe.

The stock surged 326% in 2021, but its run came to a grounding halt in 2022. The company announced earnings of $1.60 per share on revenue of $1.07 billion, which topped analysts’ expectations for earnings of $1.07 per share on revenue of $1.05 billion. The issue was company management’s guidance for its January 2023 fiscal year: It forecast revenue between $4.53 billion and $4.55 billion and earnings per share between $3.45 and $3.51. This missed analysts’ estimates for revenue of $4.71 billion and earnings of $4.36 per share.

The stock is now trading back at pre-pandemic levels, and I don’t expect it to regain momentum anytime soon. For its first quarter in fiscal year 2022, the analyst community anticipates earnings to decline 32% year-over-year to $0.87 per share, down from $1.32 per share in the same quarter of last year. Revenue is expected to come in at $1.07 billion.

Summing Up

If you hope to survive and thrive in the current market environment, investing in the 13 stocks I shared with you in this special report is not the way to do it. The fact of the matter is that 2022 is a whole new ballgame. Wall Street must contend with rising interest rates, surging inflation, slowing economic growth and the Russia-Ukraine crisis.

This is why I’m holding a special Prediction 2022 summit on Tuesday, April 5, at 4 p.m. Eastern time. During this event, I will:

• Show you the factors that tell me when it’s time to sell a stock
• Reveal one of the biggest predictions of my career
• And share an exciting new buy – stock symbol and all

So, thank you for reserving your spot for my Prediction 2022 summit. Over the next few days, you’ll receive exclusive content from me to ready you for the event.

I’ll see you on Tuesday.

Sincerely,

Louis Navellier