Financial analyst recommends investors review and potentially sell off certain stocks in their portfolios during the month of May. Suggestions include selling stocks with no price appreciation in three years, those with high price-earnings ratios, companies that have posted losses in the past year, and stocks that have declined significantly from their purchase price. Specific companies mentioned for potential selling include MicroStrategy Inc., Carlyle Group Inc., Cytokinetics Inc., Boeing Co., and Lyft Inc.
MicroStrategy Inc., a software company, is primarily trading based on its holdings of bitcoin rather than its core business. With a significant portion of its market value tied to bitcoin, the company has posted losses in three of the past four years and has financed its cryptocurrency purchases through convertible notes, putting current stockholders at risk of diluted value. Similarly, Carlyle Group Inc., a private equity firm, has seen a decline in revenue over the past year and rising borrowing costs, making the stock seem overvalued at twelve times revenue.
Cytokinetics Inc., a biotechnology company focusing on muscular diseases, has posted losses in the majority of the past fifteen years and carries significant liabilities exceeding its assets. While a breakthrough in clinical research could change the outlook for the stock, the current market capitalization is deemed overvalued. Boeing Co., known for its commercial airplanes, has faced safety issues and production slowdowns due to recent crashes, adding to the company’s financial challenges.
Lyft Inc., a competitor to Uber Technologies Inc., has faced debt concerns with a debt-to-equity ratio of more than two. Despite analysts predicting a potential profit for the company this year, Lyft has yet to show an annual profit. The article highlights the analyst’s past sell recommendations, noting that while some stocks trailed the market index, others outperformed. The analyst emphasizes that past performance does not predict future results and includes a disclosure about a hedge fund the analyst manages owning put options on Boeing stock.
