10 Deceptively Bad Stocks to Sell Before You’re Pranked

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stocks to sell - 10 Deceptively Bad Stocks to Sell Before You’re Pranked

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When the market gets volatile, all the buzz about high-growth stocks usually goes out the window fairly quickly.

The tech stocks have been slammed in recent weeks because of issues ranging from scandal to taxes. The economy looks to be doing well, any big surprise to the upside casts the pall of inflation over the stock market and whether this new Federal Reserve chairman will raise rates too much too quickly or not enough.

In periods of rising inflation in the old days, market talk was about the Federal Reserve engineering a ‘soft landing’. That meant slowing things down just enough to rein in inflation without strangling the economy.

Now, we have the opposite scenario.

In this time of volatility, sometimes investors start looking for growth and stability, which is usually found in bigger stocks or best in class stocks in strong sectors.

But sometimes the reliable names are anything but reliable these days. In a market in transition, you can make some bad mistakes looking to past winners. The 10 stocks to sell below are the tip of a very dangerous iceberg.

Stocks to Sell: International Business Machines Corporation (IBM)

Stocks to Sell: International Business Machines Corporation (IBM)

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International Business Machines Corporation (NYSE:IBM) is a classic example of a once-great company that has seemingly lost its way.

The stock is off nearly 12% in the past year, so its nearly 4% dividend, while solid, doesn’t really mean that much.

Remember, this is a tech firm that holds the nickname Big Blue because it was such an iconic company for decades. It symbolized America’s technological prowess in the world.

Now, not so much. It’s struggling to find its soul, where it can make its mark these days. Until that happens, its in middle ware, cloud computing, whatever pays the bills. That’s not a successful long-term strategy for a company with a $141 billion market cap.

Stocks to Sell: MicroStrategy Incorporated (MSTR)

Stocks to Sell: MicroStrategy Incorporated (MSTR)

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MicroStrategy Incorporated (NASDAQ:MSTR) has been around long enough to have survived the dotcom bust and come out the other side. It’s an analytics firm for enterprise clients and it has spawned a great deal of tech talent across the U.S. since the early days.

And while its business is solid, it is getting competition from every angle these days. That’s the biggest challenge for these big tech firms from earlier generations. Their size and ingenuity used to carry a premium for their corporate partners.

Now, smaller organizations can do the same thing for less. MSTR is off more than 30% in the past year and that was a time when a lot of tech stocks were blowing the doors off their earnings.

Stocks to Sell: Barnes & Noble, Inc. (BKS)

Stocks to Sell: Barnes & Noble, Inc. (BKS)

Barnes & Noble, Inc. (NYSE:BKS) is yet another blue-chip company that is just a shadow of its former self.

From the world’s largest bookseller to a company trying to survive in a world where books are no longer the currency they once were, there has been little BKS can do to survive, much less thrive.

The stock is off nearly 33% in the past year and it’s hard to see where it can improve its lot. Its core business now is textbooks and reference books through its remaining retail stores.

But Amazon.com, Inc. (NASDAQ:AMZN) ate its lunch online a long time ago. This is not a bottom-fishing play.

Stocks to Sell: Seadrill Ltd (SDRL)

Stocks to Sell: Seadrill Ltd (SDRL)

Seadrill Ltd (NYSE:SDRL) used to be one of the go-to companies in offshore drilling about decade ago. Just five years ago, the stock was trading in the mid-40s.

When the economy collapsed, and oil prices with it, SDRL was in trouble. Its rigs weren’t being rented and its debts were piling up. Then U.S. fracking became the growth industry of exploration and production rather than expensive offshore fields.

Finally, when OPEC flooded the oil markets to drive U.S. firms out of business, SDRL couldn’t keep up. Last year it filed Chapter 11 and reorganized. Now the stock trades in the 20s; 20 cents.

SDRL stock has a very long way to go to make it back to its former glory, if it ever will. And given its current condition, it may be a better merger candidate (with little premium) than a growth stock. Neither is worth the risk.

Stocks to Sell: Incyte Corporation (INCY)

Stocks to Sell: Incyte Corporation (INCY)

Incyte Corporation (NASDAQ:INCY) is a well-known biotech that has one blockbuster drug (sales around $1.1 billion) in its stable.

It seems to be looking for new opportunities with global marketing partnerships, joint development partnerships and new markets. INCY’s drug Jakafi for myelofibrosis is doing well in the U.S. and getting good exposure abroad.

So why is the stock off 2% just today and 40% in the past year?

There are a couple reasons. First, it can’t seem to get any of its other pipeline drugs off to solid start regarding FDA approvals. Second, there are new drugs that may be competing with Jakafi soon.

Having a blockbuster drug is great, unless it’s the only drug you have. Eventually there’s competition for the space with other name brand drugs or as the patent cliff approaches, from generics.

Stocks to Sell: Scana Corporation (SCG)

Stocks to Sell: Scana Corporation (SCG)

Scana Corporation (NYSE:SCG) is a utility that operates primarily in North Carolina, South Carolina and Georgia.

SCG stock is off more than 40% in the past year, due to weak earnings and rising interest rates. Utilities are expensive and borrowing costs are crucial to operating profits. When rates rise, profits are squeezed.

Also, in November, SCG abandoned construction in its new nuclear facility in South Carolina and is seeking $2 billion in tax breaks for walking away.

Once a nuclear site is mothballed, it’s highly unlikely its construction will ever move forward since having it site idle compromises site integrity. That’s even more money SCG needs to recoup.

Its 6.3% dividend looks attractive, but it’s not.

Stocks to Sell: Mattel, Inc. (MAT)

Stocks to Sell: Mattel, Inc. (MAT)

Mattel, Inc. (NYSE:MAT) is off nearly 50% in the past year, and both its short-term and long-term future aren’t very bright.

Two issues MAT is facing are going to determine if it can make it back, much less succeed.

First, the bankruptcy of Toys R Us is a significant short-term blow for the toymaker. This gigantic toy-specific retailer allowed MAT’s products shelf space and allowed children to see its wares. Most big box retailers don’t devote that kind of space to toys.

Second, and more significant long-term is the fact that kids are going digital. Fewer are playing with dolls and games and toys that aren’t online.

Figuring out how to get growth on track will be challenging indeed.

Stocks to Sell: General Electric Company (GE)

Stocks to Sell: General Electric Company (GE)

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General Electric Company (NYSE:GE), the company started by Thomas Edison, is off nearly 55% in the past year. During that time, it cut is dividend in half as well.

This used to be a “widows and orphans stock”, a stock that was considered as solid and reliable as the U.S. government. No more.

GE has been selling assets for years as it moved from one CEO’s view of the world to another CEO’s view. The problem is, a multinational conglomerate with a $117 billion market cap (at this point) is a hard ship to move quickly.

Selling off divisions worth billions of dollars isn’t like selling a used car, especially in a tough economy. It’s also hard to know what to keep to build on in a world that’s changing as fast as this one.

Trying to plug the holes in this global enterprise is a very difficult task, and there’s little reason to put your money in hoping it won’t take on more water.

Stocks to Sell: Frontline Ltd (FRO)

Stocks to Sell: Frontline Ltd (FRO)

Frontline Ltd (NYSE:FRO) is a shipping company that moves oil and oil products around the world. These companies are known for their cyclical nature and their huge dividends.

For example, FRO is currently delivering a massive 13.1% dividend yield. The problem is, the stock is off 36%.

What’s more, now the U.S. is producing huge amounts of oil and natural gas on its own, the demand for imports has slackened. In Europe, energy independence is also a priority, so they have ramped up their renewable resources, as has China.

The fact is, the oil tanker industry isn’t what it used to be and that fact is very clear when you look at stocks like FRO.

Stocks to Sell: Applied Genetic Technologies Corp (AGTC)

Stocks to Sell: Applied Genetic Technologies Corp (AGTC)

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Applied Genetic Technologies Corp (NASDAQ:AGTC) is a clinical stage biotech company based in Alachua, Florida.

First, a clinical stage company means it doesn’t have any drugs in the marketplace yet. Right now, AGTC is developing four ophthalmological drugs, with the most advanced in phase 1 trials.

Drug trials are expensive. Some run about $3 billion through phase 3 trials. That’s why big firms want to see big returns on their investments. Smaller firms are pumping all available monies into their studies.

The other risk here is, in the U.S., Medicare and Medicaid don’t prioritize eye diseases, so they don’t reimburse for them as generously as they do for more life-threatening diseases like heart disease, cancer or even diabetes.

That means, even if AGTC drugs run the FDA trials, there’s not much payoff on the backside.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate GrowthFamily 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.


Article printed from InvestorPlace Media, https://investorplace.com/2018/03/10-deceptively-bad-stocks-to-sell/.

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