February is a few weeks away. This is a fairly short window for some investors to decide to sell. For traders, this is obviously a much less important consideration. In either case, both types of investors have reason to believe that specific stocks have a reasonable chance of falling before that date. This has led to speculation about which stocks to sell.
The most relevant catalyst is what some call the end of the easy money. The liberation of the Fed The minutes of the policy meeting in mid-December made it clear that he would raise interest rates faster than expected. This means that the loan will be more difficult, sooner than expected.
the files “Showed that Fed officials were uniformly concerned about the pace of price hikes that promised to persist, alongside global supply bottlenecks” until 2022. ”The faster-than-expected rate hikes imply that officials are more concerned about inflation issues, even in the face of Omicron’s push.
The news saw the markets move away from tech stocks which typically suffer when Treasuries yields rise. This is where worried investors should look to reduce their holdings during the month. The pressure is not going to ease until then. With that in mind, here are several stocks to consider selling.
- AT&T (NYSE:T)
- Intelligence (NASDAQ:INTC)
- Tencent (OTCMKTS:TCEHY)
- Netflix (NASDAQ:NFLX)
- Zoom (NASDAQ:ZM)
- Xilinx (NASDAQ:XLNX)
- IBM (NYSE:IBM)
Shares to sell before February: AT&T (T)
There are several reasons to seriously consider selling AT&T shares in the very near future. One of the reasons that may surprise some readers concerns its dividend. AT&T is now delivering a solid dividend of 7.86%, which makes it attractive.
However, a recent article by my colleague Mark Hake indicates a possible very marked reduction in this dividend. The idea has already been mentioned and then tabled. And as Hake notes, “The truth is the company hasn’t provided any substantial update to shareholders on the proposed dividend reduction. In fact, they ignore the problem.
In addition to this, AT&T has agreed to another delay the deployment of its 5G services in the United States at the beginning of the month. US Secretary of Transportation Pete Buttigieg and FAA Administrator Steve Dickson had pushed AT&T to delay its deployment due to security concerns.
The company had already agreed to a one-month deadline that pushed the deployment back to January. This latest delay will extend the launch of the 5G service by at least another 2 weeks. Add in general concerns about tech stocks based on Fed interest rate considerations, and you have a plethora of reasons to dump T stocks.
Intel has been a supposedly underperforming for much of 2021. And by most traditional valuation metrics, it does. As my colleague Faisal Humayun recently wrote, “In terms of valuation, INTC stock is currently trading at a forward price / earnings ratio of 9.8. The stock appears clearly undervalued, with the S&P 500 Index trading at a P / E ratio corrected for cyclical variations of 38.3. “
That said, Intel is already fully priced. It is trading at just under $ 56 as of this writing, and carries a average price target of $ 54.46. If you don’t even consider the implications of recent Fed announcements, Intel already looks set to stay on the sidelines. When we do, the tech stock suddenly looks less attractive.
That is why I would stay away from Intel for the next few weeks and consider selling it in order to avoid losses.
That said, Intel has a catalyst that could increase its value by mid-2022. That’s it plans to bring your autonomous car unit called Mobileye public at that time. The Israeli company could be valued at more than $ 50 billion, with Intel planning to retain a controlling stake in the post-IPO shares.
Shares to sell before February: Tencent (TCEHY)
Tencent has had problems before. As one of the most important Chinese technology companies, it was constantly watched by an increasingly strict Beijing. This regulatory crackdown led Tencent to publish its slowest revenue growth rate since 2004.
The optimist’s point of view then was to play against the grain, establish a position and hope that Beijing calms down. If this were the case, the TCEHY stock could reasonably increase rapidly towards its almost Target price of $ 80. Unfortunately, this does not appear to be the case. All signs are that China will continue and possibly step up its regulatory crackdown.
This strong headwind was already a very serious problem for the company. And now there is another, because the news from the Fed probably won’t help Tencent. I wrote last month that I thought Tencent was a reasonable buy in 2022. That was before it was discovered that China will likely be even tougher on technology in 2022. Tencent had agreed to play with the government and saw that as a positive sign. Now, I think there is no reason to continue to believe in Tencent in the short term.
Following the massive tech sell-off following the release of the Fed’s December minutes, Netflix suffered. A report of CNBC noted that Wall Street hedge funds have undertaken four separate sessions in which they have collectively gutted tech stocks at a rapid pace.
In fact, the holiday marked the biggest sale in dollar terms in over a decade. Netflix suffered one of the biggest drops of any major tech company.
And when it rains, it rains. Because in addition to the dumping catalyzed by the Fed by Wall Street, an analyst’s warning raises new concerns.
JPMorgan’s (NYSE:JPM) Doug Anmuth warned that Netflix could be coming more than 2 million courts on new global subscribers in the fourth quarter. The company is now forecasting 6.25 million new additions, up from a previous projection of 8.8 million.
Tech stocks have benefited greatly from the easier monetary environment that investors have become accustomed to. Expect Netflix to suffer as the balance shifts the balance the other way.
Shares to sell before February: Zoom (ZM)
It wouldn’t have been difficult to be optimistic about Zoom when the Omicron variant first appeared. The new variant leads to greater distancing and renewed fears. In response, fewer and fewer employees are returning to their offices. Thus, Zoom has a powerful catalyst as employees continue to stay at home, using Zoom more.
But now, with the Fed signaling that the hikes in bond yields are outweighing Omicron’s fears, Zoom is in trouble. ZM stock did not collapse following the Fed’s announcement. But it has shown volatility and is trending downward.
Zoom had already fallen even after posting stronger-than-expected results at the end of November. The problem then was concerns about slowing growth. Investors were already starting to wonder why Zoom was getting such impressive valuations and whether they were sustainable.
It is difficult to judge Zoom correctly for this reason. The company boasted 2,507 customers with income of at least $ 100,000 over twelve months. It has a strong demand from business. But this has to be judged against the ratings. And the market may have given it too much credit, it seems.
Why investors should consider selling Xilinx before February has as much to do with the Fed as it does with China.
AMD (NASDAQ:AMD) the acquisition of Xilinx was postponed to the first quarter of this year. At least that’s the wait from now on. There is really nothing to say. What investors are doing now is that the merger has been approved in the United States, the European Union and the United Kingdom. China has yet to approve the merger. And this is a real problem.
There is a real precedent it at least suggests that AMD’s acquisition of Xilinx may fail. Back in 2018, Qualcomm (NASDAQ:QCOM) failed to acquire NXP semiconductors (NASDAQ:NXPI) after a two-year battle for approval.
Did the approval alone hinder Qualcomm’s offer? China. Given that AMD’s offer to buy Xilinx is now the longest pending public merger in the United States, investors should be concerned.
Add to that a beleaguered tech equity sector already reeling from surprise bond yields and it’s easy to see why XLNX stock shouldn’t rise quickly.
Shares to sell before February: IBM (IBM)
You could argue that IBM is a current technology stock that makes sense. This argument would be that IBM, as a “value” technological action, is reasonable. After all, he favored sharing the profits with investors in the form of dividends. It hasn’t won him many fans as he has moved sideways over the past few years. Nonetheless, this is what the investment world considers to be of value.
The company has favored investment in its shareholders rather than investment in itself. In technology, it is an antithetical approach to business. Technology is associated with growth, not with the principles of investing in value. So rather than act as an exciting technology leader developing game-changing ideas, IBM has floundered.
The company is now try to find a buyer for its Watson Health division. The company was another unsuccessful attempt to revive the aging tech business. The plan will then be to recoup the profits and find the next target to revitalize IBM. It’s more like a company that has long disappointed investors.
As of the publication date, Alex Sirois does not have (directly or indirectly) any position in any of the titles mentioned in this article. The views expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Alex Sirois is an independent contributor to InvestorPlace whose personal equity investing style focuses on long-term, buy and hold stock selections that create wealth. Having worked in multiple industries, from ecommerce to translation to education and using his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.