The stock market has featured many winners in 2024 that have rewarded patient investors. The S&P 500 is up by 16% year-to-date while the Nasdaq Composite has gained 19% year-to-date. While big tech has carried these indices higher, many smaller companies have also performed well.
It’s been hard to find stocks that have lost value this year, but they do exist. While some growth stocks look ready to rebound from their struggles to start the year, others are in free-fall and don’t have much hope. Even if a falling star reclaims grace, it’s better in most cases to put your money into an index fund instead of waiting for a laggard to snap out of its funk.
These three stocks do not look promising. Their losses are growing, and it doesn’t look like these companies will flip the script anytime soon. Investors may want to steer clear from these stocks to sell.
GameStop (GME)
The GameStop (NYSE:GME) story is clear. Short squeeze opportunities present short-term buying opportunities for retail investors who get in early. Then, the stock inevitably crashes down to where it was before the trading frenzy began. Shares are up by 71% year-to-date and already have two massive spikes in the chart. Those spikes demonstrate that the stock price dropped just as quickly as it rose.
The underlying business does not warrant a $10 billion market cap or a price-to-earnings ratio of 305x. The company’s revenue decreased by 29% year-over-year in the first quarter, coming in at $882 million. The company’s net loss came in at $32.3 million. A company with high net losses and declining revenue won’t last long.
The original meme stock is due for a 50% pullback at the minimum. Speculators have driven up the price this year, but fundamentals prevail in the long run. It’s only a matter of time when the meme frenzy turns into a rush for the exits.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) looks like it’s going to be dead money for a few years. That’s been the case since 2019, as shares are down by 18% over the past five years. The stock’s 3.3% yield compensates a little, but it stings if you look at how index funds have performed during the same stretch.
Dividend growth has slowed in recent years, with the quarterly payout only inching up from $0.39 per share to $0.40 per share this year. That’s an uninspiring 2.6% year-over-year increase for a stock that has underperformed the stock market for several years.
Recent financial results don’t offer any reason for encouragement. Revenue dropped by 13% year-over-year while net income tumbled by 41% year-over-year in the third quarter of fiscal 2024. Next quarter’s guidance implies another big revenue drop for the company. Cisco has been the type of stock that only goes up if it reports bad results instead of horrendous results. It’s best to avoid a stock that has disappointed its investors for several years.
Zoom (ZM)
Zoom (NASDAQ:ZM) is having an identity crisis as booming pandemic gains become a distant memory. It was easy for Zoom to exceed investors’ expectations when people were forced to stay in their homes and had very few options for getting out of the house. Zoom is only known for its video conferencing software, and it doesn’t have a moat in the industry.
Several tech giants have video conferencing technology that allow people to meet virtually. These tech conglomerates also don’t charge for their software, making the barrier to entry quite low. While Zoom has free plans, it needs customers to use paid plans to stay in business.
First quarter results suggest that growth is at a standstill. The company only increased its revenue by 3.2% year-over-year in the first quarter of fiscal 2025. A growth stock can’t deliver gains if it’s producing low revenue growth. The company has had several quarters of low-single-digit revenue growth which make it look overvalued, despite the P/E of 22x. Investors haven’t been convinced. They’re heading for the exits based on Zoom’s 15% year-to-date drop. Shares are down by roughly 90% from their all-time high.
On the date of publication, Marc Guberti 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.comPublishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.