The S&P 500 gives investors exposure to 500 corporations. The idea behind the large portfolio is that investors get exposure to the top companies in multiple sectors. If one stock does badly, the other 499 holdings can pick up the slack. If one sector is in a correction, the other sectors could theoretically minimize the losses.
Long-term investors haven’t had much to complain about. The long-term average annualized return for the S&P 500 is 10.32%. However, the index still has numerous stocks that aren’t doing the famed benchmark any favors. Almost 200 companies are in the red this year, with other members barely holding onto gains.
Investing in the bottom-tier S&P 500 stocks has resulted in meaningful losses. However, it’s not just the losses. Putting money into unprofitable assets causes people to miss out on the winners, such as AI chipmakers. These are some of the S&P 500 stocks to sell before the losses continue to grow.
Nike (NKE)
Nike (NYSE:NKE) has been a losing investment for more than five years. The stock is down by 9% during the past five years, and the company’s 30% year-to-date loss is even worse. The athletic apparel giant is losing market share to smaller companies as innovative ideas become more difficult to discover.
Revenue has been barely up or down year-over-year (YOY) for several quarters. The fourth quarter of fiscal 2024 didn’t do any favors with reinstalling confidence. The athletic firm reported a 2% YOY revenue decline during that quarter. Revenue only inched up by 1% YOY during all of fiscal 2024.
The press release remarks weren’t encouraging. CEO John Donahoe mentioned that the team is addressing near-term challenges and hopes their efforts will pan out. North American and European sales dropped YOY while China sales showed the most important, up 3% YOY. However, many U.S. companies have been losing market share in China. Nike’s small and only win came from China, but it wouldn’t be shocking to see Nike lose ground to Chinese brands in future quarters.
Disney (DIS)
Modern Disney (NYSE:DIS) does not care about telling good stories anymore. The company’s bland strategy has involved buying world-class IPs and churning out politically fueled content for those brands until audiences get tired of them. The company also likes writing weak men, and the only thing weaker than its writing of male characters is Disney’s stock returns. The stock is down by 4% year-to-date and has dropped by 37% over the past five years. Disney shares have been flat for roughly a decade.
Revenue crept up by 4% YOY in the third quarter of fiscal 2024, which makes a 33 P/E ratio look excessive. Disney Parks have largely carried the company for several quarters as nostalgia for good content brought people to the parks and resorts. However, Disney is even slowing down in this area, with its parks falling below analysts’ expectations.
Many companies are reporting lower revenue growth numbers due to inflation and other factors, but there’s more to it for Disney. The value proposition isn’t as enticing when trips to other top destinations are cheaper than Disney. Disney Parks are only getting more expensive.
Airbnb (ABNB)
Speaking of trips, those are getting more expensive too. People are looking for ways to save money when they go on vacation. Airbnb (NASDAQ:ABNB) answered that problem for many years, but the platform has now become more expensive than many hotels. That’s not going to help the stock recover from a 14% year-to-date loss.
Airbnb mentioned that people are pulling back on travel and are trying hotels and motels. Revenue grew by 11% YOY in the second quarter, but that growth is poised to slow down if the economy continues to endure setbacks. Furthermore, net income dropped by 15% YOY in the quarter.
The online marketplace isn’t the worst company on this list. It’s also doing better than some of the stocks on the S&P 500. However, slowing travel demand is not a good look for a company that has elevated its prices in recent years. Hotels and motels are simpler for most people to book and often come with better services.
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.com Publishing Guidelines.
On the date of publication, the responsible editor held a long position in DIS.