The stock market ended 2018 on a sour note. Back in September, stocks were flying at record highs. Since then, they’ve dropped 20% amid a flurry of concerns ranging from higher rates to bigger tariffs to slowing growth. Yet, most Wall Street analysts view the selloff as overdone, and the consensus 2019 S&P 500 price target still sits around 3,000, representing a whopping 25% upside for stocks next year.

In other words, Wall Street is saying that the recent correction is simply near-term pain that will be replaced by long-term gain in 2019.

This consensus thesis seems rationale. The headwinds that are plaguing markets (falling oil prices, trade war tensions and rising rates) are all fixable, and will likely be fixed in 2019. OPEC is cutting production. China and the U.S. are starting to make cessations, and will likely continue to do so to stop from “over-hurting” their respective economies. And, the Fed will likely go more dovish in 2019, as the economy slows.

If those headwinds disappear in 2019, and growth remains stable, stocks should rally here, with the S&P 500 trading at its lowest trailing twelve month P/E multiple since 2012 and highest dividend yield since early 2016.

But, that doesn’t mean the rally will start in January, nor does it mean that this rising tide will lift all boats. Instead, there are a handful of stocks investors should continue to avoid, even in the new year.

With that in mind, let’s take a look at seven stocks to sell in January.

Tilray (TLRY)

If you had to pick one stock to characterize the 2018 cannabis craze, it would have to be Tilray(NASDAQ:TLRY). The Canadian pot company saw its stock go from $20 to $300 to $90 to $150 to $70, all in the matter of just five months.

The problem with Tilray heading into 2019 is that this stock’s biggest potential catalyst (a big investment from a big beverage or tobacco company) is now in the rear-view mirror. Global beverage giant and the world’s largest beer maker, AB InBev (NYSE:BUD), put in $50 million to help facilitate cannabis beverage research with Tilray. The deal was underwhelming. The initial pop in TLRY stock was faded. Now, it seems all the dry powder has been used up.

Meanwhile, the valuation is still extended and the Canadian cannabis market is still suffering from supply shortages. Overall, the near-term fundamentals here aren’t great, meaning TLRY stock should remain weak in early 2019.

Micron (MU)

Chipmaker Micron (NASDAQ:MU) is the type of stock you buy when the music is playing, and sell when the music isn’t playing. For the past several months, the music hasn’t been playing for Micron. It doesn’t look like it’s going to start playing anytime soon, either.

Demand across the memory space is stagnating due to global economic concerns. Meanwhile, supply is building. Thus, the current memory market dynamic is one defined by rising supply and falling demand, and that ultimately results in lower chip prices and lower margins for Micron. When margins fall, MU stock falls, too.

The problem here is that we are early in this down-cycle, and no one knows how long it will last. Thus, until the market gets confirmation that margins are turning a corner, MU stock will remain depressed, regardless of valuation, because no one knows exactly how far earnings will fall (prior down cycles have wiped out earnings entirely).

Yelp (YELP)

Over the past several years, Yelp (NASDAQ:YELP) has under performed its digital ad peers in a big way because the company’s digital ad business simply hasn’t gained the traction that the ad businesses at Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL) or Twitter (NYSE:TWTR) have.

Yet, despite this relatively weak ad business performance, Yelp stock has found a floor recently around $30 due to rumored M&A prospects. I don’t buy these prospects. Who would want to buy Yelp? The potential suitors include Amazon, Facebook and Alphabet. But, each of them are expanding an in-house recommendations and rating system, and those in-house systems are arguably already better than Yelp. Thus, there really isn’t a compelling M&A motive here.

Consequently, the M&A catalyst should fall out in 2019. Once it does, Yelp stock will drop.

Snap (SNAP)

If anything became crystal clear in 2018 in the digital ad space, it is that once trending Snap(NYSE:SNAP) is now an afterthought for users and advertisers.

The story here is simple. Snap pioneered a new way method of ephemeral photo sharing. Everyone loved it, and everyone joined Snapchat. But, Snap didn’t protect this method, and so everyone else copied it. Everyone else had more resources, too, so they actually made better versions of Snapchat. Those better versions stole all the users. Now, Snap is left with a maxed out user base that isn’t big enough to attract advertisers in bulk.

If advertisers don’t flock to Snap in bulk, ad prices will remain cheap and margins will remain depressed. Advertisers won’t flock to Snap until user growth picks back up. Thus, until user growth turns around, this is certainly one of the key stocks to sell in January and one that investors should avoid.

JCPenney (JCP)

By now, it is well known that retailers had a really strong 2018 holiday showing. According to Mastercard, holiday retail sales rose 5% to their best level in six years, driven largely by a near 20% increase in digital shopping. But, not all retailers were big winners this holiday season. One retailer that appears to have struggled in a big way is JCPenney (NYSE:JCP).

JCP has struggled to compete in the hyper-competitive retail industry for several years. As other companies have built out omni-channel capabilities and improved product assortment, JCP has been too burdened by a debt-heavy balance sheet and falling margins to invest much of anything back into the business. As such, JCP has turned into the eyesore of retail.

This holiday season was more of the same. According to retail analytics firm Placer.ai, Black Friday weekend shopping traffic rose 10% this year. But, JCP under performed, with foot traffic rising just 1%. That’s a bearish read, and it underscores that even in a healthy economy, JCP continues to struggle. If JCP’s holiday numbers disappoint (as I expect them to), you could see JCP stock fall in a big way in early 2019.

Starbucks (SBUX)

The problem with retail coffee giant Starbucks (NASDAQ:SBUX) is three fold. First, the entire growth narrative at Starbucks is centered around expansion in China. But, the Chinese economy is cooling, and is expected to keep cooling in 2019. The more it cools, the more Starbucks’ 2019 growth rates will be impacted, and the more of a drag that will have on SBUX stock.

Second, Starbucks is a premium-priced coffee house that is anything but recession resilient. Coffee is easy to get anywhere. But, coffee at Starbucks is more expensive than coffee at McDonald’s (NYSE:MCD). Thus, if the economy does slow in 2019 and the consumer starts to feel the impact, that means that morning Starbucks runs will be replaced by morning McDonald’s runs.

Third, SBUX stock trades at around 24 forward earnings. That’s a big multiple. It hardly takes into account the aforementioned risks. Thus, if those risks rear their ugly head in 2019, SBUX stock could drop in a big way.

Proctor & Gamble (PG)

During the market selloff, defense has become the new offense, and investors have rushed into defensive consumer staples names like Proctor & Gamble (NYSE:PG). But, this rush has inflated defensive stock valuations to levels that aren’t sustainable. In 2019, as clarity and stability emerge out of the ashes of the late 2018 selloff, defensive stocks like PG will likely suffer, which lands it on this list of stocks to sell.

At the current moment, PG stock trades at an above-average valuation with a below-average yield. The big valuation is the result of broad economic uncertainty. That uncertainty won’t last forever. Either we enter a recession in 2019, or we don’t. If we do, PG stock will drop because, while it’s recession resilient, it isn’t recession proof (during the 2008 recession, PG stock still fell about 40%). If we don’t, PG stock will fall because investors will stop playing defense, and will roll money back into growth names.

Overall, the current uncertainty that’s inflating PG stock won’t last forever. Indeed, it will likely come to an end in 2019. When it does, PG stock is liable to drop.

As of this writing, Luke Lango was long AMZN, FB, GOOG and TWTR. 

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The stock market rout has left no victims, least of all secular growth giant Amazon(NASDAQ:AMZN). Mostly thanks to a rapid slowdown in the e-commerce business, Amazon stock has dropped into bear market territory recently and is having trouble staging a reversal.

The rapid slowdown in Amazon’s e-commerce business isn’t a good thing for Amazon stock. But it also isn’t that much of a surprise. After all, the business had been growing at ridiculous rates over the past several years, and expanded to control 50% of the U.S. e-commerce market. That wasn’t sustainable. Eventually, other retailers would pivot en masse to the digital channel, market share would be more evenly distributed and Amazon’s e-commerce growth would slow.

That is happening now. Amazon’s e-retail growth rates are coming off the rails. But, other retailer’s e-commerce growth rates are actually improving. That means that while Amazon stock falls, there actually a group of stocks out there that are consequently winning.

Which stocks belong in this group? Let’s take a closer look at four stocks that are winning as a result of Amazon’s e-commerce slowdown.

Stocks Winning as Amazon Stock Falls: Walmart (WMT)

The first pick on this list is an obvious one. Walmart (NYSE:WMT) is the 400-pound elephant in the retail world that has gradually ceded share to Amazon over the years. But, that trend has sharply reversed course recently.

Over the past several quarters, Amazon’s total e-commerce growth rates (online store sales plus third-party sellers services) have decelerated from the mid-20’s to just 15% last quarter. Given the weak Q4 guide, that growth rate will presumably slow to below 15% in Q4.

Meanwhile, during that stretch, Walmart’s e-commerce growth rates have consistently hovered north of 20% and often closer to 40%. Last quarter, for example, Walmart’s e-commerce sales rose by 40%. Thus, as Amazon’s e-commerce growth has cooled to sub 20% rates, Walmart’s e-commerce growth has sustained itself around 40%.

That means Walmart is rapidly stealing share from Amazon in the e-commerce world. This shifting of market share from Amazon to Walmart was inevitable. Amazon controlled 50% of the U.S. e-commerce market in 2017. Walmart controlled just 4%. In terms of total retail sales, though, Walmart dwarfs Amazon, so as Walmart pivots to e-commerce, its share will naturally grow and Amazon’s share will naturally fall.

Investors should expect this dynamic to persist for the foreseeable future. Consequently, Walmart stock should rise due to sustained robust e-commerce growth as Amazon’s e-commerce business cools.

Stocks Winning as Amazon Stock Falls: Target (TGT)

The second pick on this list is just as obvious as the first pick. If Walmart is the 400-pound elephant in the retail world, Target (NYSE:TGT) is its 50-pound little brother. Just as Walmart has gradually ceded share to Amazon over the past several years, Target, too, has ceded share. But, just as is the case at Walmart, this market share erosion trend at Target has reversed course recently.

Over the past several quarters, as Amazon’s e-commerce growth rates have slowed to 15%, Target’s e-commerce growth rates have not just remained robust like they have at Walmart, but actually accelerated higher. A year ago, Target’s e-commerce business was growing at a 30% rate. Last quarter, the e-commerce business grew at a 40%-plus rate.

Overall, as Amazon’s e-commerce growth has cooled, Target’s e-commerce growth rate has heated up to industry-leading levels. Among the retail Big 3 of Amazon, Walmart and Target, Target posted the highest e-commerce growth rate last quarter.

This dynamic will persist. In 2017, Amazon had 50% share of the U.S. e-commerce market to Target’s sub-1% share. But, Amazon’s North America retail operations aren’t 50 times as large as Target’s North America retail operations. Instead, Amazon North America retail has about twice the sales volume of Target.

Thus, as the e-commerce market continues to democratize over the next several years, Target will gradually gain share. These share gains will come at the expense of Amazon, so as Amazon’s e-commerce business cools, Target stock should rise.

Stocks Winning as Amazon Stock Falls: Etsy (ETSY)

This pick is less obvious than the first two picks. Nonetheless, Etsy (NASDAQ:ETSY) is an undeniable winner as Amazon’s e-commerce business slows. The biggest knock against ETSY stock over the past several years is that it doesn’t deserve its valuation because of inevitable “Amazonification.” Eventually, Amazon would copy exactly what Etsy does, and replicate it with greater scale and at lower prices. Sellers would quickly leave Etsy. Buyers would follow suit. The whole Etsy platform would collapse, and ETSY stock would drop.

That hasn’t happened.

Instead, Amazon’s e-commerce business has cooled. In particular, the company’s third-party services growth rate has cooled form 40% and up a few quarters ago, to 30% and slowing last quarter. Meanwhile, during that stretch, gross merchandise sales growth on Etsy has accelerated for four consecutive quarters and registered at a multi-quarter high of over 20% last quarter.

Thus, while Amazon’s third-party e-commerce growth has cooled, Etsy’s gross merchandise sales growth has accelerated.

I don’t think this is a coincidence. Etsy has clearly established a niche for itself as a trusted digital marketplace for the buying and selling of handmade arts and crafts. Amazon has tried to penetrate this market. But, they haven’t had great success. Now, Amazon’s growth is slowing. Etsy’s growth is ramping. Ultimately, that means that as Amazon’s e-commerce business continues to slow, ETSY stock will benefit.

Stocks Winning as Amazon Stock Falls: Shopify (SHOP)

This may be the least obvious pick on this list, but it also may be the biggest beneficiary of Amazon’s slowing e-commerce growth. Shopify (NYSE:SHOP), which provides e-commerce tools and solutions for retailers of all shapes and sizes, benefits tremendously when e-retail gets democratized.

Ultimately, the Shopify business model hinges on this aforementioned democratization of e-retail. Shopify provides e-commerce tools and solutions for all retailers, but with a heavy emphasis on smaller retailers who aren’t equipped to sell efficiently through digital channels. If there are only 10 retailers in the whole e-commerce world, Shopify’s market is small. But, if the e-retail world starts to look like the physical retail world with millions of retailers, then Shopify’s market becomes quite big.

Right now, we are in the process of Shopify’s market going from relatively small, to huge. In 2017, the top 10 e-commerce retailers controlled upwards of 70% of total e-commerce sales. That is exceptionally uneven distribution. In the total retail world, the top 10 retailers account for just 30%of the total retail sales among the top 250 retailers, and presumably a much smaller share of total retail sales among all retailers.

The biggest driver behind this uneven distribution? Amazon. Now, though, Amazon e-retail is cooling. By a whole bunch. Meanwhile, e-commerce growth rates throughout the U.S. remain as robust as they were a year ago, so that means most of the growth in e-commerce is coming from players not named Amazon, and that the number of retailers with e-commerce operations is growing.

That is a great thing for Shopify. In the long-term, the e-retail environment should look a lot like the brick-and-mortar retail environment in terms of sales distribution, and that means we have lot more democratizing to do. From this perspective, Shopify stock is a big winner as a result of Amazon’s slowing e-commerce business.

As of this writing, Luke Lango was long AMZN, WMT and SHOP.

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Do you watch Shark Tank, the show that replicates a tricycle version of what real venture capital is like? Well, on Shark Tank, the investors (or “sharks”, as they are called) are always talking about investing in people. By that, they mean they are investing in entrepreneurs who they know will succeed because of their personality, drive, skills, intellect and/or passion.

That is easy to do in venture capital. But, it is much more difficult to do in the public markets. After all, it isn’t everyday that you are rubbing elbows with a Fortune 500 CEO.

So how do you determine who are the best CEOs in the stock market?

Look at their track record. See what they’ve done. See what they’ve said. And, most importantly, see how their stock has done while they’ve been at the helm.

With that in mind, here’s a list of five of the best CEOs in the stock market, as determined by compounded annual average return in their company’s stock price while they’ve been the boss.

Best CEOs by Stock Market Returns: Mark Zuckerberg, Facebook (FB)

Source: Shutterstock

Compounded Annual Returns: ~32%

Social media giant Facebook (NASDAQ:FB) went public on Wall Street at $38-per-share in May 2012. Fast-forward six years and two months, and Facebook stock trades around $210 today. At the helm the whole time was founder and CEO Mark Zuckerberg.

That means that under Zuckerberg’s tenure as CEO, Facebook stock has seen its public value grow by over 30% per year. That is an impressive clip.

But, it shouldn’t be any surprise. Zuckerberg is the boy-genius founder of Facebook, turned corporate-leader of one of the world’s most dominant companies. He is constantly working to improve the products within Facebook’s ecosystem (Marketplace and Workplace), looking for strategic acquisitions (WhatsApp and Instagram), studying new technology (cryptocurrencies) and rolling out features which, even if he didn’t invent them, his platforms implement best (Stories).

Thus, so long as Zuckerberg remains at the helm of the Facebook growth machine, this stock should continue to produce in excess of 30% returns per year.

Best CEOs by Stock Market Returns: Reed Hastings, Netflix (NFLX)

Source: Shutterstock

Compounded Annual Returns: ~47%

There is the famous story of Netflix (NASDAQ:NFLX) founder and CEO Reed Hastings sitting in a hot tub with a friend in Santa Cruz in 2012 when Hastings shared with his friend that he was considering splitting the DVD and streaming business of Netflix. His friend told him it was a bad idea. And, initially, it was.

But, Hastings’ idea proved to be revolutionary. Over the next several years, streaming became the hottest trend. And Netflix, with the biggest streaming platform in the world, became the hottest company.

Then, everyone started to question Hastings again when the company decided to invest best in original content in 2015. But, over the past several years, original content has become the hottest trend in streaming. And Netflix, with the biggest original content portfolio, has once again become the hottest company.

In other words, Hastings always seems to be on the frontier of what is coming next in the entertainment industry. That is why NFLX stock has risen by nearly 50%-per-year under his tenure.

These big gains should continue so long as Hastings and Netflix continue to be the innovators in the dynamic entertainment industry.

Best CEOs by Stock Market Returns: Satya Nadella, Microsoft (MSFT)

Source: Johannes Marliem Via Flickr

Compounded Annual Returns: ~31%

In the first half of this decade, Microsoft (NASDAQ:MSFT) looked like an antiquated technology company with its feet stuck in cement. Innovation wasn’t happening. Growth wasn’t there. And MSFT stock was stuck in neutral.

Then, Satya Nadella came along. He took over as CEO in February of 2014, when the stock price was just a hair above $32. Since then, MSFT stock has soared to all-time highs of right around $107, implying compounded annual returns in excess of 30%.

How did Nadella do it? He focused on the cloud.

Microsoft had a bunch of valuable assets like Microsoft Office. They were just being distributed the old-school way via disks and chunky installation packages. So, Nadella took all those assets, moved them to the cloud, and created cloud-hosted software services.

That transition has played out beautifully. Now, revenue growth and margin growth are accelerating higher and Microsoft’s future looks brighter than it arguably ever has.

So long as Nadella continues to push cloud innovation through Microsoft’s huge business, then MSFT stock should be a lock for solid long-term gains through global cloud market expansion.

Best CEOs by Stock Market Returns: Jeff Bezos, Amazon (AMZN)

Source: Shutterstock

Compounded Annual Returns: ~43%

Jeff Bezos didn’t become the richest man on the planet by accident. He did so by pioneering a new way of commerce, and in so doing, propelled Amazon (NASDAQ:AMZN) from a $300 million start-up in 1997 to an $880 billion global retail and cloud powerhouse today.

Bezos did that by being ruthless along the way (interestingly enough, ruthless.com directs to Amazon.com). He was ruthless on pricing, cutting prices on Amazon to near break-even so as to out-price competitors. He was ruthless on perks, throwing in things like free shipping so as to one up the competition. And he was ruthless on market expansion, buying giant enterprises like Whole Foods and attempting to disrupt the grocery market right after disrupting the mall retail market.

As a result of this ruthless growth strategy, Bezos has led Amazon to being the world leader in the booming e-commerce and cloud markets. Both of these markets have a lot of firepower left. Plus, Bezos will likely be just as ruthless in dominating the pharmacy, logistics, and cosmetics markets, too.

All together, this is a big growth company with a big growth oriented leader who has a great track record of success. Thus, if you are looking for a strong stock with a strong CEO, there aren’t many out there that the fit the bill quite like AMZN.

Best CEOs by Stock Market Returns: Elon Musk, Tesla (TSLA)

Source: JD Lasica via Wikimedia Commons

Compounded Annual Returns: ~43%

He may be controversial, and he may rub you the wrong way on social media. But, you can’t argue with results when it comes to Tesla (NASDAQ:TSLA) founder and CEO Elon Musk.

Tesla went public at $17-per-share in June 2010 as a nascent electric vehicle company with big aspirations. Today, eight years and a month later, Tesla stock trades above $300-per-share, and is widely considered to be the world’s leading and premiere electric vehicle company. Those are impressive leaps and bounds, and they happened in such a short amount of time and despite frequent interruptions from Musk’s Twitter (NYSE:TWTR) feed.

Going forward, I think the best way to look at Musk is a mad genius. He does some mad things. But, he’s also a genius creating the future of transportation and energy. As an investor, it is best to forget the mad part. Focus on the genius part. That is the only part that shows up in financial statements.

TSLA stock has been under hot water recently due to Model 3 production ramp issues and credit concerns. But, in the big picture, these risks are over-stated. Longer-term, Model 3 production will ramp, credit concerns will disappear, and this company will emerge as the leader in what will inevitably be a massive electric vehicle market.

As of this writing, Luke Lango was long FB, AMZN, and TSLA.