It's a lot easier to buy stocks than sell them, but sometimes your portfolio needs some pruning. You need to sell stocks to buy different ones, and I've broken out the clipping shears this month.
I've sold my stakes in RingCentral (NYSE:RNG), Lovesac (NASDAQ:LOVE), and Bitauto Holdings (NYSE:BITA) this month. Some decisions were harder than others, but let's dive into all three moves.
Image source: Getty Images.
RingCentral
I stumbled into RingCentral two years ago, and everything about the cloud-based platform made sense. RingCentral offers a telco system where inbound calls are automatically routed to IP phones, mobile devices, PCs, and video conferencing sessions. Companies pay as little as $19.99 a month per employee for this kind of telco portability. Growth was solid 24 months ago when I bought in -- revenue climbing 33% at the time -- and that's exactly where it finds itself now.
RingCentral has served me well. It has beaten Wall Street's profit targets with ease in the past 10 quarters, and the stock has been soaring lately. With more folks working from home during the early days of the pandemic -- and now shuttling back and forth -- RingCentral's product makes more sense now than ever. I still cashed out, locking in a beefy 272% return. Growth may be peaking. Revenue is likely to dip below 30% for the balance of this year, something that hasn't happened in more than three years.
Lovesac
Premium plays in furniture don't always work out well for investors, but sometimes you have the right product at the right time in the right place. Lovesac is a maker of stylish high-end beanbag chairs and modular couch furniture, and these cozy pieces aren't cheap. You can break four figures for some of Lovesac's priciest family sized beanbags and a few grand for its modular "sactional" sets.
With folks spending so much time at home it only makes sense that they want cozy furniture, and that's where Lovesac was able to shift gears the moment it had to close its 91 showrooms three months ago. It quickly began aggressively pursuing online leads, and its e-commerce sales for the first four weeks following the closure of its store soared fivefold.
Lovesac had a monster quarter earlier this month. Sales rose 33% for the quarter that ended in early May. Its showrooms were closed in the second half of the period, but a 255% surge in online sales helped keep the top line positive. Lovesac has been a volatile stock since the company went public at $16 two summers ago. However, the dramatic surge with the stock going from below $4 in early April to the mid-$20s now leaves little margin for error here. Even if Lovesac can continue to stand above the copycats its pricey furniture may face challenges in a recession.
Bitauto
Not every exit is a success story. Bitauto is a provider of online content and marketing services for China's automotive retail industry. It seemed like a smart purchase for me 27 months ago. Bitauto was growing quickly in a country that was still early in the car migration process. With China's expanding middle class and the country's elite dot-com darlings as early investors, it was easy to take Bitauto for a test drive.
Now, auto sales have plummeted in China. Bitauto hasn't turned an annual profit since 2014, but at least it had top-line growth in its glove compartment. Now it has rattled off three straight quarters of declining revenue, a decline that predates the COVID-19 crisis. I cashed out at a 29% loss. Bitauto seemed like a smart investor's play in China's once booming automotive industry, but it's going to be a a challenging stock to own until the country's auto industry shifts out of reverse.
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June 22, 2020 at 09:49PM
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3 Stocks I Sold This Month - The Motley Fool
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