They say that "you've got to know when to hold 'em, know when to fold 'em."
This poker advice rings equally true for investing. After all, holding ASX shares that keep falling can act as a major drag on an otherwise healthy portfolio.
With that in mind, let's take a look at three big-name ASX 200 shares that experts have named as sells this week courtesy of The Bull. Here's what they are bearish on:
Image source: Getty Images
Mineral Resources Ltd (ASX: MIN)
The team at Red Leaf Securities has named mining and mining services company Mineral Resources as an ASX 200 share to sell this week.
It thinks investors should stay away from the company until its earnings volatility and debt leverage are reduced. It said:
MIN is a diversified resources company, with extensive operations in lithium, iron ore, energy and mining services across Western Australia. The diversified model provides some cash flow stability via mining services, but overall earnings remain cyclical and exposed to volatile bulk commodity markets.
Higher leverage amplifies downside risk during commodity downturns. Execution complexity across multiple divisions adds additional risk relative to simpler, more focused producers. While the company retains strategic asset value, earnings stability remains inconsistent, in our view. Until we see a reduction in leverage and earnings volatility, the stock remains a sell, or in the underweight category.
PLS Group Ltd (ASX: PLS)
Another ASX 200 share that Red Leaf Securities is bearish on is this lithium giant.
Red Leaf has put a sell rating on PLS shares due to concerns over increasing lithium supply, which it appears to believe could weigh on spot prices. It explains:
PLS is a leading Australian lithium producer. Lithium remains structurally linked to electrification, but near term fundamentals are challenged by expanding supplies. While PLS asset quality remains strong, earnings are highly leveraged to spot prices, generating volatility through the cycle. Balance sheet strength provides a buffer, but doesn't offset cyclical earnings pressure.
PLS remains a high risk recovery trade dependent on the timing of lithium re-balancing, with limited near term visibility.
REA Group Ltd (ASX: REA)
Finally, DP Wealth Advisory has named REA Group shares as a sell this week.
This has been driven by concerns over the slowing housing market and increasing competition from rival Domain. DP Wealth explains:
REA is the dominant online property platform in Australia. But competitor Domain Holdings Australia, acquired by US listed company CoStar Group, is expected to provide fierce competition. Federal Budget changes to capital gains tax and negative gearing leaves property far less appealing to investors.
The Australian property market is slowing, which could impact REA listing volumes moving forward. Auction clearance rates have been falling in Sydney and Melbourne. Other stocks appeal more at this stage of the cycle.
