Stocks to sell

Clock’s Ticking: 3 Stocks to Unload Before the Year Closes

The stock market has seen a lot of volatility in the past few months, with a sharp pullback in October that erased some of the gains from earlier in the year. Many investors wonder if this is a temporary correction or a sign of more trouble ahead. This has led to the list of stocks to sell for this article.

Morgan Stanley’s (NYSE:MS) strategist Michael Wilson has warned that a rebound is unlikely given where the economy could be headed with interest rates “higher for longer.” He advises investors to unload stocks that have underperformed or face headwinds in the current environment.

Here are three stocks to sell for investors to consider dropping before the year’s end.

AppLovin (APP)

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AppLovin (NASDAQ:APP) is a mobile app developer and marketer that went public in April 2021. The company has grown its revenue and user base rapidly. One of the main drivers of AppLovin’s success is its diversified portfolio of games across different genres, platforms, and markets. AppLovin owns and operates over 200 games, including popular titles such as Matchington Mansion, Project Makeover, Wordscapes, and Gardenscapes.

Another factor that contributes to AppLovin’s performance is its innovative technology platform that enables efficient user acquisition, monetization, and analytics.

Creating new AI tools has reinvigorated growth in AppLovin’s share price this year. Shares have risen more than 246% year-to-date. Unfortunately, despite strong quarterly results this year, current holders of AppLovin shares could see more downward pressure on the share price as traders reassess the potential growth of tech stocks in a high-interest rate environment. The company has a high debt load of more than $3.1 billion, floating and exposed to interest rate hikes. Investors having accrued a hefty return on APP should cash in now before things potentially reverse. This makes it one of those stocks to sell.

Super Micro Computer (SMCI)

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Super Micro Computer (NASDAQ:SMCI) provides high-performance servers and storage solutions for various industries. The company has benefited from the strong demand for cloud computing and data center infrastructure.

Outside of cloud computing infrastructure, Super Micro has also been crucial in the recent AI revolution. Essentially, the company provides AI infrastructure solutions that rely on the Nvidia HGX-based Delta Next solution. SMCI’s foray into AI solutions has benefited its share price. The stock has risen 207% since the start of the year.

Unfortunately for Super Micro Computer, it is not the only player in the AI infrastructure solutions space. Amazon Web Services and Microsoft Azure, which boast larger platforms, are already emerging as important players. Super Micro Computer’s stock has dropped more than 31% from its peak in August, which should signal to investors it’s perhaps time to move on to other lucrative opportunities.

MicroStrategy (MSTR)

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MicroStrategy (NASDAQ:MSTR) is a software company that specializes in business intelligence and analytics. In particular, the company primarily creates enterprise analytics tools employing AI-based workflow algorithms.

MicroStrategy’s analytics tools help improve the efficiency of users’ workflows by providing them with helpful analytics and visualizations. However, most market-watchers do not know MicroStrategy for its business intelligence product set; rather, the company is best known for being one of the largest corporate holders of popular cryptocurrencies.

The company’s stock has appreciated nearly 200% YTD, and a lot of that performance, especially recently, has certainly mimicked Bitcoin (BTC-USD). Sure, bitcoin has had a good run this year, given where it had fallen last year, but because of its speculative nature, investors should not hold MSTR shares for too long. Furthermore, MicroStrategy is trading at 179.3x forward earnings, which is astronomical and could provoke a future devaluation.

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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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