U.S. equities are not off to a great start in 2024. The Nasdaq is down two-quarters of a percentage point, while the S&P 500 is largely flat. This kind of performance from the major indices makes sense, given how much stocks rallied in the final months of 2023. However, there a still several stocks to sell for the long run. Below are three of my suggestions.
Qualcomm’s (NASDAQ:QCOM) share price, despite may prior warnings, ended 2023 okay, rising 35%, beating the S&P 500 but trailing the Nasdaq. For those who don’t know, Qualcomm specializes in wireless technology and other semiconductor products. Majority of the Android phones, for example, not only use a Qualcomm modem for wireless purposes but they also employ the power of Qualcomm’s Snapdragon system-on-a-chip (SoC).
However, developments in one of its biggest markets, China, should keep long-term investors away from QCOM. In early September, Huawei – China’s telecom, cloud, and consumer electronics champion – quietly released the Huawei Mate 60 Pro, which features a 7-nanometer system on a chip (SoC) designed and manufactured in China. Moreover, the wireless modem on the Huawei Mate 60 Pro also reached fast 5G speeds. This event, in and of itself, should worry any Qualcomm investor. This makes it one of those stocks to sell.
QCOM’s long-term share potential is definitely in jeopardy. Chinese smartphone makers make a significant percentage of global handset sales, and as China’s semiconductor industry becomes more competitive, these smartphone manufacturers are likely to rely on locally produced semiconductor products, ultimately putting at risk Qualcomm’s business and future prospects.
Apple (NASDAQ:AAPL) has been one of the most successful companies in the world, dominating the smartphone and tablet markets for more than decade. Not surprisingly, the iPhone maker’s stock had a good run in 2023, increasing nearly 50%. However, recent challenges have cast doubt on the company’s future growth prospects. Despite new iPhone and iPad releases, Apple’s revenue growth remained unchanged, disappointing investors.
The mobile handset market is at capacity. Consumer demand for smartphones is decreasing as they lose novelty with each iteration. Another reason investors should be wary of AAPL stock is the uncertainty of the China market, which accounted for about 19% of Apple’s revenue at the end of its fiscal year 2023. China is a highly competitive and volatile market.
Huawei’s launch of the Mate 60 Pro, with a 7nm SoC, led many Chinese consumers to favor it over the new iPhone amidst geopolitical tensions. According to a report by Bloomberg in late November, Apple’s iPhone 15 sales were still behind the predecessor, largely due to the resurgence of Huawei’s flagship device. Unless Apple pursues a broad and competent diversification strategy, investors should not hope for strong share price appreciation. All in all, it’s one of those stocks to sell.
Herbalife (NYSE:HLF) is a global nutrition company providing health and wellness products, including protein bars and shakes, to some 95 markets worldwide. The company made one of my ‘sell’ lists last year and as consumers are still price conscious due to inflation, I think Herbalife deserves another entry.
For those unaware, Herbalife primarily sells its products through two sales channels, direct selling and distributors. While many would perceive the success of the former as highly dependent on marketing spend and the brand’s image, the company contends that through the direct selling sales channel, customers can get proper support, coaching, and education.
Despite selling healthy products to a growing base of customers, Herbalife struggled in 2022 and those struggles continued into 2023. In particular, Herbalife saw its revenue decline by more than 10% year-over-year (YOY) in 2022. Moreover, revenue in Herbalife’s first, second and third fiscal quarter reports declined on a YOY basis.
As inflation remains elevated and the economy begins to slow down, it’s likely Herbalife continues to feel consumer pullback in the next couple of quarters. A hotter-than-expected December CPI report also clouds Herbalife’s future goals. Shares are down more than 17% YTD, and I suggest investors get out now before things get even worse.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.