When thinking about your portfolio and stock decisions, it's incredibly easy to get trapped into thinking you need to find the next multibagger -- like the quarterback who tries to throw a 60-yard touchdown instead of a 10-yard first down. In reality, many of us should simply focus on making fewer mistakes and avoiding potential value traps. With that in mind, let's take a look at two stocks it would be smart to avoid for the foreseeable future.

Gettyimages
Image source: Getty Images.

Detroit's weak link

It's certainly possible for Fiat Chrysler Automobiles (NYSE:FCAU) to pull a complete business turnaround. After all, we've seen more drastic comebacks within the past decade: Ford's (NYSE:F) business turnaround was one for the history books during and after the financial crisis. But there are so many questions facing Detroit's third-largest automaker that it's simply too risky right now.

Let's start with the fact that the company's bottom-line profit relies heavily on the success of Ram truck and Jeep sales. While General Motors (NYSE:GM) and Ford also rely on trucks and SUVs for much of their profits, those automakers are also showing promise with their luxury lineups, smaller cars, and smart mobility projects that could generate incremental profits in completely new areas -- think of something along the lines of Uber -- while FCA has taken a backseat in these areas. Not only that, but Jeep has shown rare signs of weakness recently. 

Jeep
Data source: FCAU sales releases. Chart by author.

Furthermore, let's consider that the U.S. auto industry needs a decent to strong December sales result to top last year's total. The industry's new-vehicle sales are plateauing after an incredible post-recession run, and that's going to pressure both top and bottom lines to some degree going forward. On top of sales plateauing here, FCA lacks a competitive presence in the world's largest automotive market, China, while GM competes with Volkswagen for the top foreign automaker spot, and Ford has surged up the sales ranks since 2012.

Lastly, both Ford and General Motors are far less leveraged on the balance sheet, and FCA's turnaround, which requires a global expansion of Jeep, Maserati, and Alfa Romeo, will be expensive. The company has a chance to turn things around, and it has a fantastic CEO in Sergio Marchionne, but if you're going to bet on a major automaker, FCA shouldn't be at the top of that list. 

This cat has nine lives

Caterpillar, Inc. (NYSE:CAT) has done an excellent job thinning out its operations and cutting costs. The problem is that it's been incredibly difficult to offset the drastic impact its plunging sales have had. There's mining, commodity, and general economic weakness throughout much of Caterpillar's markets across the globe, and North America has a heap of used construction equipment that's hindering the company's sales here. These issues have caused consistent top- and bottom-line weakness.

CAT Chart

CAT data by YCharts.

Worse yet, Caterpillar's management reduced guidance twice this year, and despite adjustments, the company noted it believes analysts' estimates for 2017 are "too optimistic" -- ouch. Adding to its upcoming woes is that the weaker top line is expected to add $350 million to $450 million in margin pressure on its bottom line next year. Then, short-term incentive compensation for employees will hit profits by as much as $600 million. With the bottom line feeling the pressure, it's not crazy to wonder how long Caterpillar's dividend will remain sustainable -- something that was unthinkable even a few years ago. 

Caterpillar has a brand image and network of dealers across the globe that give it scale just about any business would envy. This cat has nine lives and will be around for a long time to come, but it's also facing years of the same doom and gloom with no catalysts in sight to fuel a turnaround story. With no growth story present, smart investors will continue to avoid this stock.

Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.