Stock to Sell #1 – Barnes & Noble (BKS)
Barnes & Noble (NYSE:BKS), the largest bookstore operator in the United States, has over 700 stores. It is under extreme pressure from competitive e-book sales and diminishing profits from its own e-book margins. Despite an attempt to gain market share in that sector, it has been under mounting pressure from other sellers, especially Amazon.com’s (NASDAQ:AMZN) Kindle.
Its return on invested capital (ROIC) was -3.2% in fiscal year (FY) 2012, its lowest in 10 years. Earnings for FY 2013, ended in April, are expected to be -$0.99 versus -$1.41 in FY 2012. Consensus estimates for FY 2014 are -$0.81.
After a nine-month consolidation, the stock broke an important support line at $14, and so it is likely to test the September low at $11.17. The MACD is on a sell signal and volume has been negative for most of December.
Sell BKS if you own it. Short sellers could see a quick trade to $11 or lower. As with all short sales, check with your broker for any margin requirements and the ability to borrow the stock, and enter a stop-loss order to protect against potentially unlimited losses.