There’s no doubt about it: The outgoing market of 2011 has left a lot of equities badly damaged. The extreme volatility that shifted into overdrive in August pushed numerous stocks into cardiac arrest, and though some undoubtedly will make a full recovery, others will remain on life support for some time. In 2012, there are a host of stocks that look as if they’ll continue to remain on sick leave, and in order to avoid their bearish contagion, investors should keep them under quarantine.
Bank of America
Nearly everyone is familiar with Bank of America’s (NYSE:BAC) woes, as so many investors have been along for the wild ride. Investors have seen the stock dip from more than $50 per share before the 2008 financial crisis down to $3, then back up to $20 in 2010 and now back down to just north of $5. BAC’s toxic combination of bad mortgage loans, ill-advised acquisitions such as Merrill Lynch and Countrywide, and poor balance sheet management continue to plague the financial giant. Until management can get its act together and correct these problems, I won’t be banking on BAC shares in 2012.
Who uses film cameras anymore? The answer is virtually no one, and that’s why Kodak (NYSE:EK) went from a high of $80 per share in the 1990s to its current price of about 70 cents per share. Kodak has tried to make the switch to delivering digital products with its digital printing and packaging business, but so far it has failed mightily. The company just announced that current general counsel Laura Quatela has been appointed president, and that boosted the stock about 9.5% in last Friday’s trading. But aside from this brief bullish snapshot, I “shutter” to think how EK will fare in 2012.
In November 2010, General Motors (NYSE:GM) shares began trading again with all the hype and fanfare befitting the once-stalwart American icon. Since then, GM shares have stalled, conking out nearly 40%. The auto market is tough right now, and with the U.S. and global economies growing at an anemic pace, U.S. unemployment and underemployment still persistently high and fears of a Europe-induced global recession on the horizon, GM shares are likely to remain in the slow lane in 2012.
The dual bad decisions from Netflix (NASDAQ:NFLX) CEO Reed Hastings — first to raise prices, and then to split the company in two — caused the once-rising A-list stock star to fade all the way down to the D-list. NFLX shares plunged nearly 60% in 2011, and until Hastings & Co. can write a better script, I’m staying away from this box-office dog and putting my money into stocks with Academy Award-winning potential.
Research In Motion
Embattled BlackBerry maker Research In Motion (NASDAQ:RIMM) is perhaps the most obvious choice for this list, as its troubles in 2011 reveal a company reeling from a furious combination of big punches. First there is the competition from Apple’s (NASDAQ:AAPL) iPhone and Google’s (NASDAQ:GOOG) Android-operated smartphones, and then there is the damage to its reputation caused by the massive worldwide service outage in October that lasted about three days. The stock has tumbled 76% in 2011, and now the only saving grace for RIMM in 2012 is that the stock has fallen so far that it could be a good takeover trade. Despite that remote possibility, I think it’s time for investors to hang up on RIMM.
This article originally appeared on Traders Reserve.