Viking Fund Management Sells Big Oil Stocks In Q3, Cuts Tesla Position In Half, Adds To Largest Position Broadcom

• (0:30) - How Do You Know When To Sell Your Winning Stocks?
• (10:40) - Learning From 5 Hot Stocks Hitting New All Time Highs
• (30:45) - Episode Roundup: VRT, RCL, SHW, URI, CAVA
• Podcast@Zacks.com

Welcome to Episode #424 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.

This week, Tracey is going solo to talk about when an investor, or a trader, should sell a stock.

Investors Should Have a Plan

The first thing every investor should have is a plan. Why are you investing? Why this stock or ETF?

The second thing is to have a goal. Maybe you are investing to save for retirement or your child’s college education. Or maybe it is to buy a vacation home.

Either way, you should have a goal for this investment.

Goals can make investors feel like they’re more in control. If your goal has been met, there’s nothing wrong with taking your profits. You have succeeded.

Market timing is difficult. Even Warren Buffett hasn’t succeeded in selling Apple or Bank of America at the “top.”

Should You Use the Zacks Rank to Help Determine Whether to Sell?

The Zacks Rank is a short-term recommendation. It has Ranks 1 through 5, with 1s being the Strong Buy stocks and 5s being the Strong Sells. But if you are a long-term investor, the Zacks Rank doesn’t really give you much guidance on when to sell, because the Rank is based on analyst earnings estimate revisions.

Analysts revise their earnings estimates every quarter, at a minimum. Even companies like Amazon have been Zacks #5 (Strong Sell) stocks in recent years but that doesn’t mean a long-term investor should be selling.

The Rank is better deployed as just one tool to help guide you as to when to sell.

5 Red-Hot Stocks: Should You Sell?

1. CAVA Group, Inc. (CAVA)

CAVA Group is the red-hot Mediterranean restaurant chain. Tracey recorded the podcast before its recent earnings report but it beat again and still has a perfect earnings surprise track record since it went public in 2023.

Shares of CAVA Group have soared in 2024, adding 240%. It’s not cheap, with a forward P/E of 322. But investors aren’t buying it as a value stock. They are buying CAVA’s growth.

Should you sell CAVA Group now?

2. The Sherwin-Williams Company (SHW)

Sherwin-Williams, the paint company, hit new all-time highs in 2024 even as it faces a challenging macro environment due to the slowdown in paint sales. The stock is up 27.3% year-to-date.

Valuations look stretched. Sherwin-Williams trades with a forward price-to-earnings (P/E) ratio of 34 and a PEG ratio of 3.1. Neither one of those indicates a value.

Should you sell Sherwin-Williams now?

3. United Rentals, Inc. (URI)

United Rentals, one of the largest equipment rental companies in the world, has been hitting new all-time highs for several years. In 2024, shares are up another 48.4%.

United Rentals trades with a forward P/E of just 19.7 even with the huge rally in the shares. It has a PEG ratio of 2. United Rentals also pays a dividend, currently yielding 0.7%.

If you’ve been on the United Rentals train the last few years, is it time to get off?

4. Royal Caribbean cruises Ltd. (RCL)

Royal Caribbean’s stock has been on quite the trip. Year-to-date, shares are up 93% to new all-time highs.

Yet Royal Caribbean still has attractive valuations. It trades with a forward P/E of just 20.1. Royal Caribbean also has a PEG ratio of just 0.6. A PEG ratio under 1.0 usually indicates a company has both growth and value.

Should you sell Royal Caribbean heading into 2025?

5. Vertiv Holdings Co. (VRT)

Vertiv is a services provider in the red-hot data center market. It’s in partnership with NVIDIA on the data center build outs.

Shares of Vertiv are up 167% year-to-date to new all-time highs. It’s not a cheap stock. Vertiv trades with a forward P/E of 46. But due to double digit earnings growth, it has a PEG ratio of just 1.4.

Should investors take their gains in Vertiv and run?

What else do you need to know about selling red-hot stocks?

Tune into this week’s video podcast to find out.

[In full disclosure, Tracey owns shares of VRT in her personal portfolio and in Zacks Value Investor. RCL is in Tracey’s Insider Trader portfolio.]

Zacks Investment Research