6 Stocks to Sell in a Hot Market

A chunk of Bloom Energy’s business comes from data centers, which now require more power for AI. (Courtesy Bloom Energy)

Key Points

• Wolfe Research’s chief investment strategist identified stocks to short, including Boeing and DoorDash, based on recent CFO departures.
• Bloom Energy’s stock surged 1,000% in the past year, but its CFO abruptly left in April, following another CFO departure in 2024.
• Analysts expect Bloom Energy to burn $34 million on $1.77 billion in sales this year.

Some investors have fear of missing out in a hot market. Others have an opportunity to shed shares and take profits—a move that makes sense for some today.

All of the major U.S. stock indexes are up this year, with the S&P 500 rising almost 16% and hitting several new highs this year. Enthusiasm among investors abounds—for companies benefiting from artificial intelligence, the related data-center construction across the globe, the push for manufacturing onshoring in the U.S., a consumer that won’t stop spending money, and lower interest rates.

That’s despite several risk factors. Data showed that inflation hit 3% in September. While that was lower than expected, it’s a percentage point above the Federal Reserve’s 2% goal. Tariffs aren’t helping the inflation picture, so the Fed could cut rates less than expected in the coming year. So economic growth, which has slowed in recent years, could disappoint. Another risk is that Big Tech could cut back on its data center investments, which would reduce expected sales for the many companies that build the properties. Any of these risks could rear their heads soon.

So Wolfe Research’s chief investment strategist Chris Senyek screened for stocks to sell short, or bet against. To be clear, shorting a stock requires high conviction that some catalyst will knock it lower, typically within a six-month time frame. While some of these stocks will likely prove great shorts over the coming months, some may not. One possible takeaway from this screen is that these are names to sell for those who own them.

Senyek’s screen includes only companies that have recently parted with their chief financial officers, signifying that many of them are undergoing significant strategic changes, which always poses some risk that profits don’t live up to expectations. Most of the stocks have exploded higher in the last 12 months, and the vast majority of these firms are expected to burn cash this year, so any slight disappointment on earnings releases could knock them lower.

The screen’s results include Boeing, DoorDash, software provider Snowflake, networking product maker for data centers and other customers Lumentum, and manufacturer AeroVironment.

Another is Bloom Energy, the $22 billion maker of fuel cells, which convert chemicals into electric energy. The stock has surged about 1,000% in the past year, as a chunk of its business comes from data centers, which now require more power for AI. Its chief financial officer, Daniel Berenbaum, abruptly left his role in April. That was a year after his predecessor, CFO Gregory Cameron, left in 2024.

Meanwhile, Bloom will have to fund its explosive sales growth, so the market will want to see cash flow roll in soon in order for the stock to keep gaining. This year, analysts expect the company to have burned $34 million on $1.77 billion of sales, according to FactSet. They forecast sales will grow to $2.19 billion next year, which should come with a near doubling of capital expenditures to $104 million. The jury is still out on whether the company will produce free cash flow next year.

Selling this name is more than reasonable. The stock’s returns have already been extraordinary, and there’s plenty of downside risk.

The same goes for the other stocks above.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com