August 2, 2025
Every successful investor knows a painful truth: knowing when to sell is often more critical than knowing what to buy.
While financial media overwhelmingly focuses on buying opportunities, our research consistently identifies companies facing significant headwinds that merit serious consideration for selling. These aren’t just stocks underperforming the market; they’re businesses confronting structural challenges, deteriorating fundamentals, or carrying valuations disconnected from financial reality.
What you won’t find here: reactionary calls based on short-term price movements or headline volatility. Each company on this list has been thoroughly analyzed across multiple metrics that historically precede substantial declines.
Smart investors understand that portfolio management requires both addition and subtraction. Sometimes the best investment decision is to redeploy capital away from troubling positions before problems fully materialize in the share price.
This week’s watchlist highlights stocks showing critical weaknesses that demand immediate attention:
Lumen Technologies (LUMN)
Lumen Technologies exemplifies how debt-burdened companies pursuing turnaround strategies can face extended periods of value destruction even when achieving modest operational improvements. The network infrastructure company’s 16.52% plunge following second-quarter results reveals the market’s impatience with “shrink to eventually grow” strategies when time is running short. Despite technically beating earnings expectations with a smaller adjusted loss of $0.03 per share versus $0.13 the previous year, the 5.4% revenue decline to $3.09 billion missed analyst expectations and highlighted the fundamental challenge facing management’s transformation efforts.
The company’s enterprise business segmentation strategy appears increasingly problematic, with the “Nurture” segment declining 18% year-over-year despite being positioned as a stable middle-growth category between the growing and declining segments. This unexpected weakness in what should be a predictable revenue stream calls into question management’s ability to accurately forecast business trends and execute the strategic pivot to enterprise-focused services. While the “Grow” segment’s 8.5% increase and surprising 2.1% growth in the “Harvest” segment provide some encouragement, the overall trajectory remains concerning given the timeline pressures created by the company’s debt burden.
Most alarming is Lumen’s precarious financial position, with $18.3 billion in total debt representing 4.9 times adjusted EBITDA. While the planned sale of 95% of its consumer fiber business to AT&T will reduce leverage to 3.9 times, this still represents an unsustainable debt load for a company experiencing persistent revenue declines. The $500 million increase in 2025 free cash flow guidance appears misleading, as $400 million stems from a one-time tax benefit rather than operational improvements. At $3.71 with extraordinary trading volume of 44.7 million shares versus the 11.4 million average, Lumen shows classic signs of institutional abandonment. For investors seeking telecom exposure, the combination of heavy debt, revenue declines, and execution uncertainties suggests waiting for either a successful turnaround completion or debt restructuring before considering investment.
Casella Waste Systems (CWST)
Casella Waste Systems demonstrates how acquisition-driven growth strategies can mask underlying operational deterioration and create unsustainable earnings expectations. The waste management company’s 5.29% decline following earnings reflects investor disappointment with a massive bottom-line miss despite strong revenue growth. While second-quarter revenue of $465 million represented impressive 23% year-over-year growth, GAAP net income fell to just $5.2 million ($0.08 per share) from $7 million the previous year, dramatically missing analyst expectations of $0.33 per share.
The fundamental concern with Casella’s business model is the disconnect between top-line growth and profitability generation. The company completed six acquisitions in the first half of 2025, suggesting that revenue growth is largely purchased rather than organic. This acquisition-heavy strategy typically leads to margin compression and integration challenges that can persist for quarters or years. The company’s 17.79% gross margin provides limited cushion for operational inefficiencies, while the dramatic earnings miss suggests management may be struggling to effectively integrate acquired assets or accurately forecast integration costs.
Perhaps most concerning is management’s decision to lower full-year profitability guidance despite raising revenue expectations, projecting GAAP net income of just $8-18 million compared to previous guidance of $10-25 million. This revision suggests the earnings miss was not a one-time event but rather indicative of structural challenges in converting acquired revenue into profits. At $102.98 with a market capitalization of $7 billion, Casella trades at extremely high multiples to its modest profitability, creating significant downside risk if margin pressures persist. The elevated trading volume of 1.13 million shares versus the 438,000 average indicates institutional investors are reassessing positions following the guidance revision. For investors seeking exposure to the waste management sector, Casella’s combination of acquisition dependence, margin compression, and premium valuation suggests considering alternatives with more predictable organic growth and profitability conversion.
Tilray Brands (TLRY)
Tilray Brands illustrates the persistent challenges facing cannabis companies attempting to achieve sustainable profitability in an oversupplied and heavily regulated market. The company’s 16% weekly decline despite posting an unusual adjusted profit highlights how even positive developments cannot overcome fundamental sector headwinds. While Tilray achieved $20 million in adjusted net income ($0.02 per share) versus analyst expectations of a $0.02 loss, this improvement was overshadowed by declining revenue across both cannabis and beverage segments, with net revenue falling to $224.5 million from $230 million the previous year.
The most troubling aspect of Tilray’s results is the nearly $1.3 billion GAAP net loss, primarily from goodwill and intangible asset write-downs related to the 2021 Aphria merger. These massive charges reflect the industry’s dramatic valuation reset since the merger, when cannabis optimism was at its peak and acquisition prices reflected unrealistic growth expectations. The company’s cannabis revenue decline to under $68 million from nearly $72 million, combined with beverage revenue falling to $65.6 million from $76.7 million, demonstrates persistent market share erosion across core business segments.
At $0.57 per share with a market capitalization of $626 million, Tilray remains significantly overvalued relative to its financial performance and growth prospects. Even Jefferies analyst Kaumil Gajrawala’s $1.50 price target (implying 163% upside) failed to generate investor enthusiasm, suggesting the market has lost faith in cannabis sector recovery narratives. The 18.50% gross margin provides minimal operational leverage, while the company’s inability to achieve consistent revenue growth after years of market development raises questions about long-term viability. With trading volume declining to 20.5 million shares versus the 32.8 million average, even speculative interest appears to be waning. For investors still holding cannabis positions, Tilray’s combination of revenue declines, massive write-downs, and sector-wide challenges suggests the industry remains in a prolonged downturn that could last years rather than quarters.
Bottom Line
This week’s featured companies demonstrate how different types of operational challenges can create persistent headwinds regardless of management efforts or occasional positive developments. Lumen Technologies faces the dual pressures of debt service and revenue decline during a strategic transition, Casella Waste Systems struggles to convert acquisition-driven growth into sustainable profits, and Tilray Brands confronts industry-wide challenges that appear structural rather than cyclical. In each case, the market’s reaction suggests investors are losing patience with turnaround stories, acquisition strategies, and sector recovery narratives that have failed to deliver sustainable value creation. For prudent investors, these situations highlight the importance of distinguishing between temporary setbacks and fundamental business model challenges that may persist regardless of management’s best efforts.
