In the first weeks of a new year, most stock-based articles are all about what to expect for the coming year, what are the best sectors and the hottest stocks. That’s certainly all well and good, but there are also stocks to sell that should be avoided in the coming year, even in some of the top sectors.
One thing to remember about investing is, not all stocks in a hot sector rise at the same level, if at all. For example, the chip sector may be hot, but much of the growth may be in the mobile sector, not the desktop device sector.
These 10 awful stocks to kick to the curb may be waiting for their sector’s tide to lift their stock price, but that doesn’t mean you should wait along with them. The speed at which weak companies fall these days makes this list bottom fishing folly.
Stocks to Sell: United States Cellular Corp (USM)
United States Cellular Corp (NYSE:USM), aka, US Cellular is a second-tier mobile phone carrier with a market cap of $3 billion.
There are a couple of real issues here. The first is, as the market leaders continue to consolidate their bases by adding content and other features for their customers, since the data network is becoming a commodity, USM can’t keep up. It doesn’t have the money to grab content providers, so it has to compete on price, service and phones, none of which are growth sectors.
And that’s reflected in its deteriorating numbers. These smaller carriers may have a niche market, but that niche is shrinking, not growing. And there’s not much of a buyout premium here.
Stocks to Sell: Edgewell Personal Care Co (EPC)
Edgewell Personal Care Co (NYSE:EPC) is a consumer products firm that has pulled together a decent assortment of personal care brands, focusing on shaving, swim and feminine hygiene products.
The problem is, this is a tough sector when the economy is doing well, since it’s not a high margin business in the best of days. And when the big players in the sector are having growth troubles, it’s going to hit smaller firms like EPC even harder since they have to compete against the competition and the economy.
It may make it out of its current predicament, but this isn’t the time to buy in. There could be plenty of downside left.
Stocks to Sell: Mattel, Inc. (MAT)
Mattel, Inc. (NYSE:MAT) toys are familiar to baby boomers. But that pre-digital nostalgia isn’t helping MAT compete in today’s markets.
Barbie dolls, Matchbox and Hot Wheels may be popular on eBay, but sales aren’t moving the needle in a world of mobile gaming apps and massively multiplayer online games.
There is certainly a place in kids’ lives for offscreen fun, but the proportion of children that are playing with ‘real’ toys is certainly a lot smaller than it used to be. The stock is off nearly 50% in the past 12 months and that isn’t the bottom.
Stocks to Sell: Transocean LTD (RIG)
Transocean LTD (NYSE:RIG) is an offshore driller that has operations around the world. The problem is, in the U.S., the shales are where the focus is on drilling right now. And abroad, prices are still so low, that there isn’t much incentive to drill.
These supply and demand issues have been at the heart of RIG stock’s demise. In the past five years, the stock is off a whopping 77%.
Even with an improving global economy, it’s going to take a long time before RIG gets anywhere close to its glory days. And before that may be more trouble than good news.
Stocks to Sell: Condor Hospitality Trust (CDOR)
Condor Hospitality Trust, Inc. (NASDAQ:CDOR) is a real estate investment trust that operates 19 hotels in 9 states, primarily in the South. Texas and Florida are its top two states.
CDOR is currently transitioning its properties from economy hotels to higher-end hotels in these markets.
Given the fact that some of these properties were damaged by the summer’s hurricanes, that may be a good decision. But CDOR is also undertaking a relatively large expansion simultaneously.
This may all pan out, and its 7.1% dividend may endure, but the risks are too high right now to take the risk. The stock is off 25% in the past year. There are plenty of other better choices right now.
Stocks to Sell: Essendant Inc (ESND)
Essendant Inc (NASDAQ:ESND) is a wholesale distributor of workplace items. This is getting close to being a wholesale buggy whip distributor.
First, workplaces are not what they used to be and many companies, having slashed budgets during the Great Recession, aren’t interested in spending where they don’t have to.
Second, workers are no longer in traditional office environments any longer. That means smaller offices with less traffic and less demand for office supplies.
Third, online retailers and other office supply chains are expanding their roles in this sector. That means tighter margins and growing competition.
The stock is off 55% in the past 12 months, so don’t think its 5.9% dividend is any consolation.
Stocks to Sell: Libbey Inc. (LBY)
Libbey Inc. (NYSE:LBY) is the No. 1 glassware supplier in the Americas.
It was founded in Cambridge, Massachusetts in 1818, and moved to Toledo, Ohio in 1888. It has been around a very long time. In 1904, it was the first company to automatically produce light bulbs.
But 200 years later, the world is a significantly different place, and the U.S. is a much different market. Now LBY has to compete with glassware and tableware that is coming from all over the world.
Its market cap is now a mere $171 million and it’s still struggling. The stock is off almost 60% in the past 12 months, as its latest quarterly earnings and revenue were disappointing. The 6% dividend isn’t worth the risks.
Stocks to Sell: Quantum Corp (QTM)
Quantum Corp (NYSE:QTM) is a data storage company that launched in the dotcom frenzy and never got much traction after that bubble burst.
The stock is off 95% since it IPO’d in 1999. In the past year it’s off 12%.
The biggest challenge QTM faces is, data storage is one of the most dynamic sectors in tech today. And their solutions aren’t breaking new ground, but attempting to manage legacy systems and traditional data lifecycles.
It has a cloud component, but so does everyone else at this point. It doesn’t add much value and the competition is only getting stronger.
Stocks to Sell: Vitamin Shoppe (VSI)
Vitamin Shoppe Inc (NYSE:VSI) had a pretty good idea when it launched in 1977. Provide stores that focused solely on nutritional supplements for individuals health and wellness.
With 700 stores in its franchise in the U.S. and Puerto Rico, it took advantage of all the health and fitness trends over the years. Even as competition grew, it held its own.
But online competition has crushed VSI like it has so many brick-and-mortar retailers. The stock is off 91% in the past 5 years, and 80% in the past 12 months. What’s more, there’s little reason for anyone to come in and try to save it.
Stocks to Sell: Eldorado Gold Corp (EGO)
Eldorado Gold Corp (USA) (NYSE:EGO) is a Canada-based gold company with operations in Turkey, Greece, Romania, Brazil and other spots.
Given the unique locations of its properties, most aren’t major operations but it produces about 300,000 ounces of gold annually.
EGO had some issues with permitting for some of its mines in 2017 and that slammed the stock. It’s off 60% in the past 12 months.
Those troubles continue. Add to that the inexorable rise of the stock market as well as the bond market, along with a global recovery and gold prices aren’t likely to rally anytime soon.
And the bitcoin frenzy is also a major distraction to gold prices.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.