13 Stocks to Avoid At all costs this Year – A Warning to Investors

Many Seeking Alpha writers dutifully presented their lists of stocks for 2023, as is almost a yearly ritual. You can discover a list of your interests in growth stocks, dividend stocks, real estate investment trusts (“REITs”), and more, on just about any subject. I will offer my contrarian perspective on such lists in this article: 13 stocks to avoid at all costs in 2023. Let’s get going.

Tesla

Tesla’s P/E ratio has significantly decreased over the past year, but it still seems expensive when compared to many of its rivals. Let’s face it: Tesla is no longer the only viable EV manufacturer in the mid-to higher price range as the EV market is becoming more competitive. Margin reduction is taking place as a consequence of this competition. Additionally, a CEO who appears to be acting erratically and unpredictably is typically not good for stock values. Because of this and the impending recession, I predict that Tesla’s share price will continue to decline in 2023 and that it should be listed among stocks to avoid.

Oil and big oil producers

Oil and raw material demand typically decline during recessions, which has an effect on prices. After the crash at the beginning of 2020 during COVID, the oil market had some great years. Although I don’t anticipate a severe price decline, I do anticipate a period of consolidation in 2023 and at the very least a lack of performance this year. Even if a recession is avoided, it is unlikely that the energy price will increase more quickly than the overall economy. Large oil producers’ profits will be affected by this. 2022 was a wonderful year for oil, but I predict that 2023 will be different.

Luxury goods stocks

Typically, demand for luxury goods declines during recessions. Over the past few years, there have been a number of very prosperous large luxury goods businesses. These businesses create upscale champagne, perfumes, and make-up, among many other products.

Even though these stocks’ P/E ratios don’t appear to be significantly overvalued historically, these ratios won’t mean much if their sales decline as a result of a recession. Even though these businesses are excellent ones and are probably excellent long-term investments, I believe that these are among the stocks to avoid because they will perform poorly in 2023.

ZIM Integrated Shipping

The company of ZIM Integrated Shipping (ZIM) has received a lot of discussion on Seeking Alpha. The business used to have a very strong performance driven by high container prices and giving out a huge dividends, but things have changed.

One of the most significant benchmarks for the cost of shipping dry products around the world is the Baltic Dry Index. This index peaked at 5500 points at the end of 2021, but it’s presently at a 2.5-year low of 801 points. This helps to explain why ZIM trades at such a low price and offers such a staggering dividend return.

With a possible recession looming, shipping rates are not anticipated to quickly return to their former glory. ZIM is currently trading with a high-risk/high-return ratio. According to research, it is one of the stocks to avoid in 2023, because the risks exceed the rewards.

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Dogecoin and Shiba Inu

Shiba Inu and Dogecoin (DOGE-USD) have already underperformed significantly in 2022, and I anticipate this tendency to continue. Both coins are merely meme coins with no technological advantages over competing coins. Nevertheless, they both command market capitalizations of $6 billion for Shiba Inu and $11 billion for Dogecoin, which seem to suggest they have genuine advantages and benefits.

Cruise lines

Cruise companies have struggled during the covid, and if there is another downturn in 2023, demand will fall even further for these luxury goods. Some of the biggest cruise lines are Norwegian Cruise Lines (NCLH), Royal Caribbean (RCL), and Carnival Corporation (CCL), so I’ll include their stocks in my prediction of stocks to avoid in 2013.

Plug Power

Plug Power is valued as a promising growth company with a P/S ratio of almost 14 and a market capitalization of close to $10 billion, which it may be. However, management has a track record of consistently overpromising and under-delivering, and the hydrogen market will face some significant challenges in the years to come. In particular, the energy crisis could have a long-term negative impact on the company’s operations. In my view, Plug’s price reflects too much short-term optimism. Although I anticipate that Plug Power might be a long-term winner, I won’t have achieved long-term success by 2023.

AMC Entertainment (AMC)

It might be losing favor with Reddit users. However, AMC Entertainment shares have so far been able to preserve the bulk of their meme stock gains. From its 52-week peak of $72.62, it has decreased by more than 56%. However, at $31.75 per share, it has increased by an astounding 1479.6% since the beginning of 2021.

Despite this, don’t anticipate shares of this network of movie theaters to continue to rise from here.

Clover Health (CLOV)

It might be losing favor with Reddit users. However, AMC Entertainment shares have so far been able to preserve the bulk of their meme stock gains. From its 52-week peak of $72.62, it has decreased by more than 56%. However, at $31.75 per share, it has increased by an astounding 1479.6% since the beginning of 2021.

Despite this, don’t anticipate shares of this network of movie theaters to continue to rise from here.

Nio (NIO)

When it comes to NIO stock, the recent resurgence in interest in EV (electric vehicle) plays has helped allay concerns about escalating the Chinese regulatory crackdown. Other factors, however, could place even more pressure on the shares of the luxury EV manufacturer, which is based in the largest electrified vehicle market in the world.

Nio continues to be priced based on overly optimistic delivery growth projections, Will Ashworth of InvestorPlace recently wrote. What’s implied? If its delivery numbers and financial outcomes turn out to be below expectations, shares may decline.

Palantir (PLTR)

Although Palantir is a fantastic business, its stock is currently trading at an excessive premium. Thus, it is understandable why investors are optimistic about this big data play. It still has significant benefits when trying to land contracts with federal government agencies in the United States. Up until now, expanding its client base in the private sphere has been a work in progress. But that might alter shortly.

Peloton (PTON)

Investors had optimism that PTON stock, a winner in the at-home economy, could keep winning thanks to the spread of the delta variant. Shares of the at-home fitness business have increased due to a number of other factors, including the announcement by UnitedHealthcare (NYSE: UNH) that millions of people covered by its health insurance policies will receive free access to the company’s fitness class subscription service.

These positive developments, however, do not guarantee that Peloton won’t continue to lose more of its pandemic-related gains.

Virgin Galactic Holdings (SPCE)

One of Virgin Galactic’s rockets may have safely launched Richard Branson, the company’s public face, into space. Undoubtedly, it is progressing. However, after its recent pullback, don’t use this as justification to purchase its shares.

SPCE stock may appear to be a good buy-the-dip opportunity after dropping from about $49 per share just before Branson’s launch to about $25 lately. However, it’s crucial to keep in mind that the company still has a long way to go before its business strategy, which was inspired by science fiction, becomes an economic reality.

Conclusion 

Investors are cautioned in this piece about the stocks to avoid at all costs in 2023. I hope you find it helpful as you read it. Ask questions, and we’ll respond as quickly as we can.

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