S&P/ASX 200 Index (ASX: XJO) stocks are up 0.68% to 8,597 points at the time of writing on Thursday.
Toby Grimm from Baker Young has named two ASX stocks that he thinks investors should sell.
One of them has only been trading for 13 days.
Let's find out why.
2 ASX stocks to sell in July: expert
Insurance Australia Group Ltd (ASX: IAG)
IAG has enjoyed a strong run on the boards with the share price up by about 50% over the past two years.
This ASX 200 financial stock reached an all-time high of $9.21 on 31 January.
IAG shares then plunged in February despite the company reporting a 91% profit for 1H FY25.
A rebound ensured, with IAG shares touching $9.18 per share on 24 June.
Now, they're down again. In other words, there's volatility.
Today, IAG shares are trading at $8.55, up 1.18% for the day so far.
Grimm said IAG had benefited from "ideal operating conditions", but change may be ahead.
He comments (courtesy of The Bull):
The insurance giant has recently enjoyed ideal operating conditions with relatively low competition, strong premium increases at a time of subdued claims and rising interest returns on reserves.
Undoubtedly, this mix is good for as long as it lasts, but we see far more scope for deterioration than improvement and would be looking to lock in the healthy profits made to date.
Virgin Australia Holdings Ltd (ASX: VGN)
Grimm also has a sell rating on the ASX airline share and recent IPO, Virgin Australia.
Virgin Australia returned to the ASX as a listed company on 24 June.
The IPO raised $685 million through the sale of 236.2 million shares for $2.90 apiece.
After the IPO, new investors held just under a third of the issued stock, with the previous owner, Bain Capital, the largest shareholder.
As we covered on the day, Virgin shares had a good start, rising to an intraday high of $3.25 during their first trading session on 24 June.
Two days later, Virgin shares ascended to $3.405 apiece, which is the highest they have traded so far.
That represented a 17% increase on the ASX airline stock's IPO price.
Virgin shares have since retreated and fell below their IPO price to $2.83 per share on Monday.
The Virgin share price is currently $3.12, up 0.16% for the day.
Grimm noted that the float was successful.
He said "clever capital structuring" and a 15% drop in global crude oil prices over the first two days of trading helped the stock along.
But Grimm sees headwinds coming for the ASX 200 airline stock, commenting:
… the domestic airline industry has enjoyed a particularly favourable environment with limited capacity growth amid strong demand, factors we believe are likely to unwind in time, making the current valuation difficult to sustain.
