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The latest employment figures saw indices rise. However, losses earlier in the week persist as investors remain cautious of the Fed’s stance on interest rate adjustments. Amid this climate, it’s essential to highlight a few potential Nasdaq stocks to sell. They could represent a shift from the buoyant sentiment a month ago when the Nasdaq and broader markets reached successive record highs. While returns have been strong year-to-date (YTD), some analysts argue that exuberance may be fading as the Nasdaq posted near double-digit gains in Q1.
Expecting higher valuations to face corrections and better align with company fundamentals is reasonable. For context, the Nasdaq’s price-to-earnings multiple of 33.4 is at its highest since the dot-com bubble. This doesn’t imply there will be a definite turn, but it raises the prospects for certain Nasdaq stocks to sell as they have become overvalued.
Should the Fed refrain from or delay expected rate cuts in June, higher borrowing costs could impact firms with high debt. Such companies could become the prime Nasdaq stocks to sell before potential price reversals. Even without a major market downturn, price declines could still occur, with investors on the lookout for Nasdaq stocks to sell.
The three Nasdaq-listed companies that appear ripe for reassessment before reality sets in are:
DoorDash (DASH)
DoorDash (NASDAQ:DASH) is one of the Nasdaq stocks to sell as the delivery business faces intense competition. Despite surging demand during the pandemic and soaring delivery costs, the company has consistently failed to achieve profitability. DoorDash symbolizes this trend, as its revenues steadily increase year-over-year (YOY) while profits remain red.
Investors betting on such companies are looking to achieve profitability in the future. However, with high inflation, increasing interest rates, and DoorDash’s ongoing struggles to get margins under control, it’s worth considering as one of the Nasdaq stocks to sell. The company will report earnings in early May. Failing to assure hopes of near-term profitability could negatively impact its stock price. This could mark it as a main Nasdaq stock to sell.
DexCom (DXCM)
DexCom (NASDAQ:DXCM) is yet another one of the potential Nasdaq stocks to sell. DexCom, which provides glucose meters, saw its stock tank when weight-loss drugs were released last year. This was expected to lower the demand for obesity-related monitoring devices. However, since last October’s market upturn, share prices have rebounded. They have surpassed last year’s levels despite DXCM providing no major changes to its outlook. Regardless of this resurgence, savvy investors looking for Nasdaq stocks to sell may want to focus on DexCom.
DXCM has surged 82% since last October, but the company anticipates only 16-21% organic revenue growth. Its P/E ratio has soared to 106x, which puts it at risk of returning to a valuation more in line with the healthcare sector average of 23x. For investors tracking Nasdaq stocks to sell, DexCom’s valuation could be an opportunity to reassess their positions before the stock realigns with the broader sector’s norms.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is the final pick of the Nasdaq stocks to sell. The company has benefited from the growth in artificial intelligence. However, its performance has outpaced its results as its sales and earnings have not matched the stock price momentum. AMD was slow to offer its own AI chips, which explains its revenue decline. So, unless the company transforms its execution in the following quarterly report, investors may lose patience given its high P/E of 310x.
Given this inflated valuation, AMD’s stock could be one of the Nasdaq stocks to sell, as it is exposed to higher risks. Investors closely monitoring Nasdaq stocks to sell might consider AMD’s high valuation as a warning flag. This suggests the possibility of a realignment to a price level matching its performance.
On the date of publication, Stavros Tousios 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.