Why American Airlines Group Inc (AAL), Sony Corp (ADR) (SNE) and Tempur Sealy International Inc (TPX) Are 3 of Today’s Worst Stocks

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Although the rally paused late last week, optimists remained hopeful the slowdown was just a pre-weekend break. It wasn’t. Today’s market what selloff was in some cases the biggest dip since President Trump was elected in early November. The S&P 500‘s close of 2,280.90 was 0.60% worse than Friday’s last trade.

Why American Airlines Group Inc (AAL), Sony Corp (ADR) (SNE) and Tempur Sealy International Inc (TPX) Are 3 of Today's Worst StocksIt could have been worse, though — you could have owned Tempur Sealy International Inc (NYSE:TPX), Sony Corp (ADR) (NYSE:SNE) or American Airlines Group Inc (NASDAQ:AAL). These three names were among the worst of the worst, albeit for understandable reasons.

Here’s the deal.

American Airlines Group Inc (AAL)

For the second trading day in a row, American Airlines Group found itself on the daily ‘Worst 3’ list. The reason for each day’s setback, however, is distinctly different.

On Friday, AAL lost 4.3% of its value following its disappointing quarterly earnings report. Today, the stock fell another 4.4% in the wake of an immigration ban imposed by President Donald Trump. The dust is still settling on the executive order, so it’s not clear to what extent — if any — the new but temporary rules will have on airlines like American. It’s widely agreed, however, this could take a bite out of demand for passenger air services. As Raymond James analyst Savanthi Syth explained it:

“Not only does this make it more cumbersome to obtain a U.S. visa, it sets up the possibility of retaliatory actions on U.S. travelers from these countries. However, it is unclear how many current applicants are able to take advantage of the interview waiver and how many may be discouraged from traveling to the U.S. as a result.”

Syth believes AAL is one of the more vulnerable names to the Presidential action.

Sony Corp (ADR) (SNE)

Just three days before it reports its fiscal third-quarter numbers, electronics and media giant Sony cautioned shareholders that it was going to be taking nearly a $1 billion writedown thanks to a subpar performance from its movie division.

The write-down for SNE — which will be charged as a reduction of goodwill — is intended to be an accurate reflection of the future profitability for its media division. Although Sony can and still does make some quality flicks, a few too many of its recent films like the reboot of the Ghostbusters reboot haven’t done as well as expected. While that has hurt at the box office, it’s just as problematic for SNE’s DVD and Blu-ray disc business.

Revenue on that front still ultimately depends on how successful its movies are in theaters. The recent exit of the division’s chief also points to more trouble ahead.

Sony ended the day down 3.5%.

Tempur Sealy International Inc (TPX)

Last but not least, mattress maker Tempur Sealy International saw its shares upended by a whopping 28% on Monday after reporting it had severed its contract with Mattress Firm … its biggest and best retail venue.

TPX made the decision despite the fact that Mattress Firm accounts for approximately 20% of the mattress manufacturer’s annual revenue. Tempur Sealy simply explained it was unwilling to make “significant economic concessions” in order to keep its wares in those stores.

TPX stock sputters, as it’ll be out of Mattress Firm stores by the end of the quarter.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/01/why-american-airlines-group-inc-aal-sony-corp-adr-sne-and-tempur-sealy-international-inc-tpx-are-3-of-todays-worst-stocks/.

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