The S&P 500may be headed to record highs, but many stocks haven’t quite kept up with the market’s pace. More often than not, such laggards attract the attention of investors because of their low prices and valuations.

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Not all stocks are created equal, however. Some of these "cheap" stocks could, in fact, prove toxic to your portfolio’s health, just like these three that our contributors have identified:Sears Holdings(NASDAQ: SHLD),CVR Partners LP(NYSE: UAN), and GoPro Inc (NASDAQ: GPRO).Here’s why you might be better off avoiding these three toxic stocks.

A retailer that’s selling itself off bit by bit just to limp along

Chuck Saletta(Sears Holdings): Former retail giant Sears Holdings is showing signs of severe desperation. It keeps casting off pieces of itself with things like key executive defections during the critical holiday season, the need to offload its iconic Craftsman tool line to raise capital, and continued store closings. On top of that, the costs of insuring its bonds recently hit new highs, a sign that debt investors think the company may not avoid bankruptcy.

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Sears Holdings has not turned in a full fiscal-year’s profit since 2010. It burned through around $1.5 billion in cash from its operations over its last four reported quarters.It has negative total equity on its balance sheet. And if all that weren’t enough, Moody’s recently downgraded its debt rating to the extremely speculative grade of Caa2.

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At around $6.50 per share, Sears Holdings’ shares may look like a low-priced stock, but its shares just might fall all the way to $0 before all is said and done.

This 11% dividend-yield stock is riskier than you think

Neha Chamaria (CVR Partners): Investors in fertilizer stocks have been hit hard in recent years, as tumbling profits at fertilizer manufacturers sent shares crashing. CVR Partners’ stock has been no different, having lost almost 80% in the past five years. While a recovery in the fertilizer markets should boost CVR’s prospects, I believe it is one of the riskier stocks that you can easily avoid.

But wait… doesn’t CVR’s eye-popping 11% dividend yield make it attractive? Not quite, despite the fact that CVR is structured as a master limited partnership (MLP) that’s required to distribute all of its cash flows not required for operations and maintenance activities to its shareholders.

CVR is a variable-distribution MLP, so its dividends fluctuate quarter to quarter. So for instance, CVR did not pay any dividend during the third quarter, as it suffered losses. The following chart shows how rapidly CVR’s net income, operating cash, and dividends paid have declined in the past five years.

UAN Net Income (TTM) data by YCharts.

CVR has expanded its production capacity and geographic footprint after acquiring Rentech Nitrogen Partners last year, but as a pure-play nitrogen company, CVR’s future still depends entirely on one nutrient, unlike other diversified fertilizer manufacturers. That could delay CVR’s turnaround, as the nitrogen markets continue to face a supply glut.

In fact, the International Fertilizer Association projects global nitrogen supply to exceed demand over the next five years, which could keep nitrogen prices under check and make it even more difficult for CVR to grow its top line. This concern even compelled ratings agency Moody’s to downgrade CVR’s debt rating last November.

All in all, there are too many challenges facing CVR today and little to suggest a turnaround anytime soon. If you want exposure to the fertilizer industry, you’d be better off sitting CVR out and going for one of the larger diversified players.

Despite huge sell-offs, this camera company could still be a value trap

Keith Noonan(GoPro Inc): With a price-to-sales ratio of just 1.2 andshares trading near lifetime lows, GoPro stock has some tempting characteristics, but long-term investors without high risk tolerance should probably steer clear of the action-camera company. After shuttering its entertainment division last year, GoPro’s dream of building a media network appears to be dead, which means that the company needs to come up with a breakthrough on the hardware front. That’s not an attractive proposition to bet on.

The company’s recent quarterly report suggests less-than-stellar demand for its Hero 5 camera line. While some of the weak performance for GoPro’s core product can be attributed to initial manufacturing issues, soft revenue guidance for the current quarter indicates bigger problems.

Following its first mainline Hero camera release in roughly two years and the reintroduction of its Karma drone, the company expects sales between $190 million and $210 million for the first quarter of fiscal 2017. That’s troubling when compared to sales of $183.5 million in the prior-year period and $363.1 million in the first quarter of fiscal 2015. GoPro’s current product lineup is theoretically much stronger than last year’s, and the fact that sales targets don’t reflect that is a huge warning sign, despite cost-cutting efforts to improve the company’s bottom line.

Even after a 15% reduction in the company’s workforce, GoPro expects to post a net loss across fiscal 2017, and the research and development expenses needed to ensure that the company can stay at the forefront of the action cameras in the face of increasing competition will present an obstacle to achieving sustained profitability down the line.

With indications that its core product line is weakening and murky outlooks in key growth areas including drones and 360-degree cameras, investors looking to GoPro stock as a potential value play should be aware that it still packs serious risk of turning poisonous.

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The author(s) may have a position in any stocks mentioned.

Chuck Saletta has no position in any stocks mentioned. Keith Noonan has no position in any stocks mentioned. Neha Chamaria has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.

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