Knowing when to sell a stock is important. Selling at the right time can ensure that your profits are maximized and help your portfolio’s profits compound over time. While there are many rules of thumb around when to sell a stock, a general rule is that it is a good idea to lock in your profits after a stock has climbed 20% -25%. However, in volatile times such as now, it can be smart to lock in any profits as markets gyrate up and down. While it can be difficult to time the market, it is easy to see when profits are there for the taking. And it would be frustrating for anyone to see a sizable profit of 20% or more vanish. While stock markets around the world remain volatile, many stocks have staged big rallies during this year’s first quarter and rebounded from the downturn of 2022. Here are three top growth stocks to take profits on now before the market’s next leg lower.
|Royal Caribbean Cruises
Royal Caribbean Cruises (RCL)
Things are looking up for the cruise-line industry as we approach the summer. The largest cruise lines are reporting record bookings for this year, with many of them noting that last year’s Black Friday was the single largest booking day in their histories. Some North American ports are preparing for a record number of ships in their harbors in coming months. This is great news for Royal Caribbean Cruises (NYSE:RCL), the second largest cruise line operator in the world after its rival, Carnival Corp. (NYSE:CCL).
Royal Caribbean’s earnings have surpassed analysts’ average expectations in recent quarters as the company enjoys a rebound from the pandemic when its ships were stuck empty in ports.
As Royal Caribbean prepares for what it says should be “historical occupancy levels” on its cruise ships this year, its stock has gained 33% in the last six months, including a 25% increase so far in 2023. While the stock’s run has been impressive, reasons to now sell RCL stock include high fuel prices, a strong U.S. dollar, and a potential recession, all of which have historically been problematic for the cruise industry.
This time last year, the shares of Netflix (NASDAQ:NFLX) were caught in an avalanche as investors dumped the stock amid declining subscriber numbers and analysts’ reports claiming the company’s best days were over. To its credit, Netflix responded quickly to control the damage and alleviate investors’ fears. In recent months, Netflix has rolled out a new, cheaper, streaming tier that is supported by advertisements and has begun cracking down on password sharing worldwide.
Those efforts have helped NFLX stock recover, gaining nearly 50% in the past six months. So far this year, the stock is up 10%. While the bleeding has stopped and the share price has regained some of its lost ground, the current rebound feels tenuous.
Netflix lives and dies by its number of new subscribers reported each quarter. Any miss on those forecasted numbers usually causes its share price to sell off heavily. Also, the competition that Netflix faces is only growing as seemingly every entertainment company moves to a streaming model to distribute content.
Netflix is slated to report its first-quarter earnings on April 18. Take profits on NFLX while the stock is still riding high.
American Express (AXP)
The global banking crisis that roiled markets seems to be over for now. But investors, analysts and regulators remain nervous. A whisper that there is a problem at a large financial institution seems likely to send bank stocks lower. And that’s bad news for American Express (NYSE:AXP). While most investors know American Express as a leading credit card company, particularly when it comes to business travel, it is also the 17th largest bank in the U.S. and bigger than many regional banks, including the now defunct Silicon Valley Bank.
This explains why AXP stock has sunk 10% in the last month. Before the banking crisis, American Express had been riding high on strong earnings and a bullish outlook. The company also raised its dividend payment by 15% and announced plans to buy back 120 million of its shares.
These actions led to AXP stock staging a strong rally since last autumn. After bottoming at $139 a share in early November, the stock has gained 16%.
But given how fragile sentiment around financial stocks is right now, the gains of AXP stock might not stick. So take the profits that you earned from it while you can.
On the date of publication, Joel Baglole 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.