At the moment, there aren’t many stocks challenging all-time lows. Obviously, broad market indices sit at all-time highs after a decade-long bull market. Most stocks have done reasonably well in the past few years, and the expectation right now is for more gains as 2020 rolls on.
But there’s also the fact that currently challenged sectors don’t have a lot of potential candidates. In energy and retail, for instance, many companies have been public since the 1990s or earlier. As such, even big recent declines still leave shares well above the darkest days of 2001 or 1987. Cannabis stocks had perhaps the ugliest 2019 of any group, but widely-held names like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) traded below $2 before optimism toward the industry spiked a few years back.
Still, there are a few stocks out there at real risk of reaching new all-time lows this year, for varying reasons. These three names seem the most likely to do so.
All-Time Low: $4.41, Oct. 14, 2002
It’s certainly possible that Overstock.com (NASDAQ:OSTK) will prove to be a poor choice for this list. Even after a difficult couple of years, OSTK’s recent price of $8 still sits well above its 2002 lows. Shares would have to drop over 45% in 2020 to set a new level — and many bulls would strongly dispute that’s possible, let alone likely.
After all, there’s still an intriguing underlying bull case for OSTK. The e-commerce business has improved its profitability in 2019, after an ill-advised attempt to ramp up spending and compete with Wayfair (NYSE:W). The company’s blockchain efforts under its Medici Ventures banner have potential. And the company’s controversial (to put it mildly) chief executive officer, Patrick Byrne, departed in late August, perhaps allowing for at least more stable trading in 2020.
But from a broad perspective, this remains a company with significant problems ahead. The company is guiding for another loss in 2019. Overstock.com still is funding itself via so-called “at the market” offerings; as of the end of the third quarter, the company had sold nearly $150 million in stock since August 2018. Those sales may well continue, and can further pressure the OSTK stock price.
Improvements in the e-commerce business should slow in 2020 with cost-cutting mostly complete. Blockchain revenue growth has been minimal. And new management hasn’t yet made a clean break with some of the past strategic missteps that have dogged the company for nearly two decades now.
Overstock.com stock has bounced about 20% in recent weeks, but that looks like a “dead cat bounce” with potentially some help from traders closing out profitable short positions. The long-term trend here remains sharply negative. OSTK lost 79% of its value in 2018 and 48% more in 2019. A repeat performance wouldn’t be a surprise, and would be enough to send shares to new lows.
All-Time Low: $14.01, Oct. 6, 2016
There’s actually an intriguing contrarian case for polymer resin manufacturer AdvanSix (NYSE:ASIX). Pretty much everything is going wrong at the moment. Demand has slowed globally for reasons that are well out of AdvanSix’s control. So-called “plant turnarounds,” in which the company conducts maintenance and upgrades, are pressuring earnings this year to a greater degree than usual. AdvanSix even has dealt with interruption after a fire at a key supplier.
And so it’s certainly possible that the news can get better; in fact, it seems likely that it will. At some point, that should read across to a stock that has dropped by nearly two-thirds from 2017 highs and that looks downright cheap at the moment. ASIX stock trades at a little over 7x the 2020 consensus earnings per share estimate.
That said, it seems unlikely the reversal will come quick enough for ASIX to not at least threaten levels it reached soon after its 2016 spin-off from Honeywell (NYSE:HON). ASIX stock only needs to decline a little over 12% from its current price to reach an all-time low. With even giants in the chemicals space like LyondellBasell (NYSE:LYB) and DuPont (NYSE:DD) struggling to gain traction, the bet here is that it gets worse for ASIX stock before it gets better.
Yiren Digital (YRD)
All-Time Low: $3.56, Feb. 11, 2016
Just a few weeks ago, it looked like Yiren Digital (NYSE:YRD), formerly known as Yirendai, was going to reach new all-time lows in 2019. Shares dipped below $5 in early December, at which point they had dropped some 70% in a little over six months.
A recent rally has given shareholders a respite — but the bounce here doesn’t necessarily look sustainable. Trading in what essentially is China’s version of LendingClub (NYSE:LC) has largely followed that of its American counterpart. Early optimism after a 2015 IPO sent YRD stock above $40. But after doubling in both 2016 and 2017, shares dropped 76% in 2018 and 48% last year.
To be fair, Yiren is nicely profitable, and looks absurdly cheap with a price-to-earnings multiple below 3x. But revenue is declining, competition is intense, and credit worries are substantial. This increasingly looks like a stock that is cheap for good reason.
The gains of late likely have come thanks to optimism toward progress in the U.S.-China trade war. But once those headlines fade, investor attention well could turn toward the top-line pressure and credit risks that sent YRD stock plunging in 2018 and 2019.
As of this writing, Vince Martin has no positions in any securities mentioned.