[Editor’s Note: “30 Stocks on a Deathwatch” was originally published in March 2020. It is regularly updated to include the most relevant information.]
If we had ended June around the first half, things wouldn’t look so bad. For instance, a surprisingly positive May jobs report saw the economy add 2.5 million jobs. Later, retail sales from that month showed a substantial spike in consumer sentiment. Therefore, it appeared that the case for stocks to sell was itself on the decline.
However, the latest round from weekly initial jobless claims gave us greater insights toward the long road ahead. Nearly 1.5 million workers filed for unemployment benefits, which came in above the consensus forecast of 1.35 million. While continuing claims saw a reduction to 19.5 million, it’s hardly what you would call a substantive improvement.
The other factor that has suddenly made stocks to sell “great” again is the pronounced effect of America’s wealth gap. As a startling New York Times article points out, the richest among us have cut their spending the most. This created a negative trickle-down effect, hurting lower-income service workers and businesses who depend on catering to the affluent.
And if these terrible events weren’t enough, the novel coronavirus is again supporting the narrative for stocks to sell. Recently, California and Florida have posted record numbers of new daily infections, sounding the alarm for a possible second wave. That implies a reduction in both consumer sentiment and economic activity.
Put another way, it’s time to consider these deathwatch stocks to sell.
Stocks to Sell: Luckin Coffee (LK)
After a horrendous incident of accounting fraud, Luckin Coffee (NASDAQ:LK) consistently found itself as among the worst performers on a year-to-date basis. According to Barcharts.com, LK stock is again leading market losers after posting a 4.5% loss on the June 25 session.
Here’s the deal – Luckin lied and portfolios died. Sure, proponents – if there are any left – can argue until they’re blue in the face about the massive growth opportunities for coffee in China, which is traditionally a tea market stronghold. Who cares? Luckin presented itself as a growth opportunity and growth was exactly what they lied about.
If that wasn’t bad enough for LK stock, look at the geopolitical context. The world is reeling from the coronavirus, which like it or not originated from China. I only point this out because the Chinese government hasn’t exactly been forthcoming with what they knew about the virus. Plus, relations between Washington and Beijing have deteriorated badly over the last several weeks.
And now, investors are supposed to have positive sentiment towards Luckin? I don’t think so. This is a company that wholeheartedly deserves to be on your list of stocks to sell.
Chesapeake Energy (CHK)
Over the past week, Chesapeake Energy (NYSE:CHK) claimed a small victory. CHK stock is no longer the absolute worst-performing security at time of writing, thanks to a massive 9% move up on the June 25 session.
And this just underscores the basic point that no matter what, Chesapeake is exposed to the oil and gas industry. The harsh reality is that oil is the last thing anyone needs. In fact, the company would be doing us all a solid if they would drill the oil back into the earth.
I was kidding. But with CHK stock plummeting 92% YTD, you know that something is desperately wrong with this sector. Furthermore, Chesapeake hasn’t done itself any favors, making poor decisions that outside fundamentals later exacerbated.
On every level, CHK stock makes about as much sense as oil prices dropping below zero. Don’t be a hero and just put this into your trash heap of stocks to sell.
Stocks to Sell: Invesco Mortgage Capital (IVR)
According to their website, Invesco Mortgage Capital (NYSE:IVR) specializes in “high, risk-adjusted returns” through a portfolio of residential and commerical mortgage-backed securities and mortgage loans. Right off the bat, we have a problem. Shocking exactly no one, IVR stock is one of the worst performers among stocks to sell, shedding nearly 77% YTD.
As with almost all of these names, I have nothing against Invesco as a company. But in our new normal, its core business suffers from a two-front attack. On one hand, the residential real estate market was already facing troubles because the sector was being steadily priced out for many would-be home buyers. The threat of the coronavirus to jobs and prices is not what IVR stock needs at all.
On the other end of the spectrum, nearly half of businesses did not pay their commercial retail rent in April and May, making this segment of the real estate market a landmine. Until we get better signals, it’s best to leave IVR on your list of stocks to sell.
Chefs’ Warehouse (CHEF)
Like so many names on this compilation of stocks to sell, I have nothing against Chefs’ Warehouse (NASDAQ:CHEF). In terms of growth and profitability, the company has a solid record. As well, I’d say its balance sheet is decent enough (though not great). Therefore, in a bullish environment, I can see myself recommending CHEF stock.
However, with the current crisis, I can’t think of a reason to speculate on CHEF stock. Unfortunately, the underlying business – equipment for restaurants – is exactly what we don’t need. Throughout the country, eateries have closed their doors. Over the next several weeks and months, many of them will do so permanently.
Even if shares are cheap, you’ll want to sit this out until you get a better read on the consumer economy. And the token rebound on CHEF stock doesn’t count as meat shortages due to food-processing plant closures suggest the consumer is far from a recovery.
Finally, I’d like to add that with states having reopened their economies for high-contact businesses like restaurants, CHEF is particularly vulnerable. Obviously, this is because the jump in coronavirus cases implies a return to quarantining, whether self-imposed or otherwise.
Stocks to Sell: Dave & Buster’s Entertainment (PLAY)
In the time before coronavirus, I’ve suggested buying the dips on Dave & Buster’s Entertainment (NASDAQ:PLAY). Although I hate to go back and reverse course on my idea, I’m left with no choice. Principally, my thesis on PLAY stock involved the psychological concept that we humans are social creatures. But in the post-coronavirus era of social distancing, Dave & Buster’s is a no go.
As with adult gaming venues, the company represents the antithesis of various health agencies’ recommendations. First, you have the same circulated air that you’re breathing. Second, Dave & Buster’s is a socializing platform, mixing people with games, food and drinks.
In other words, it’s a combustible mix for spreading infectious diseases. However, shares have moved higher on anticipation of pent-up demand as businesses, particularly restaurants reopen.
Still, I’m cautious because people are looking for any excuse to save money, not to spend it. Further, in-home entertainment and social gaming platforms can replace much of the business model. Thus, you should keep PLAY stock in quarantine.
Ruth’s Hospitality Group (RUTH)
Don’t be alarmed! The “hospitality” in Ruth’s Hospitality Group (NASDAQ:RUTH) is exactly what you think it means. Therefore, you can take the significant other – and the kids if you want – without any awkward exchanges.
However, what you should worry about is the incredible decline in RUTH stock since the start of the year. Despite the underlying company’s premium restaurant brand Ruth’s Chris Steak House, few people are willing to go out, let alone dine in an expensive establishment. With so much going on – including the meat-shortage crisis that’s over the horizon — steakhouses rank well below in the priorities list.
Again, if we were in any other circumstance, I wouldn’t quickly dismiss Ruth’s into the heap of stocks to sell. But in an economic crunch, luxury restaurants are easy to eliminate from the family budget. As I mentioned near the top, the most affluent workers are doing exactly that – cutting spending on non-essentials.
Yes, shares have bounced higher off the restaurant business reopening across the U.S. But the personal saving rate reached a ridiculous all-time high of 33% in April. That tells me enthusiasm for dining out is largely limited. Thus, you should probably cancel your reservation for RUTH stock.
Stocks to Sell: Park Hotels & Resorts (PK)
As a real estate investment trust specializing in hotel properties, Park Hotels & Resorts (NYSE:PK) needs at least some semblance of a normal economy. Of course, a raging bull market like we’ve had in recent years would do wonders for PK stock. But any environment where at least society’s better off folks are still mobile is acceptable.
As you might imagine, a pandemic is the last thing that management wanted. What’s particularly brutal about Covid-19 is that it does not discriminate: no matter your social status or what you look like, the virus will spread at the first opportunity. Thus, state governments shut down their economies, which while supposedly the best course of action – The Atlantic, a progressive outfit, called the shutdowns the “least bad option” – it completely disrupted our way of life.
Right now, Park Hotels & Resorts received a nice influx of investor sentiment due to the economic reopening narrative. But I believe this thesis ignores the reality of millions of Americans still out of work. Also, the rise of teleconferencing and remote work suggests cost-cutting and outsourcing will become the rule of the day in the new normal, which doesn’t necessarily support travel demand.
There are so many variables, financially and health-wise. Especially, the rich are not opening their wallets like they used to. I’m not sure if I want to play the guessing game so I’m avoiding PK stock.
Norwegian Cruise Line (NCLH)
Exposed to a sector that faces disheartening, perhaps crippling times ahead, Norwegian Cruise Line (NYSE:NCLH) is an easy inclusion among stocks to sell. In theory, most of us probably appreciate the idea of cruises; principally, getting away from the office and going on a seabound voyage. That is, until someone has a devastating infectious disease.
Then, the narrative becomes less “The Love Boat” and more “Fear the Walking Dead.” If you’re thinking about gambling on NCLH stock, think again.
To be fair, from the middle of May to early June, NCLH stock did look interesting as a speculative bounce-back opportunity. However, what also bounced back was the coronavirus. Recently, the U.S. suffered its highest one-day total of new coronavirus infections since April. That’s more than enough to send jitters to would-be travelers.
Therefore, I would do the smart thing and steer clear of NCLH stock for now.
Stocks to Sell: Apache (APA)
An oil and gas exploration company, Apache (NYSE:APA) is now pointless. Don’t read into this – I’m not trying to be mean. Rather, I’m just speaking plain truths. With crude oil prices falling down into astonishing, agonizing depths, the majors like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) will encounter severe problems.
For a name like APA stock? If you’re optimistic about it, I applaud your bravery. But bluntly, I don’t understand your argument one bit.
Sure, speculators received a nice chunk of change as APA stock bounced higher since the beginning of April. However, this is not a sustainable rally. Despite unprecedented price cuts among OPEC+ nations, the issue here is the utter lack of demand.
Eventually, demand will return but to what threshold? I doubt that we’ll be back 100% to pre-pandemic capacity this year. Therefore, the entire oil industry has become a game of musical chairs. I’m just not sure if there’s a seat waiting for vulnerable names like Apache.
Finally, the spike in coronavirus cases portends an ugly environment for the oil industry. Even if states don’t shut down, their residents can voluntarily quarantine themselves, presenting yet another demand-related headache.
In the best of times, Groupon (NASDAQ:GRPN) was a speculative bet. During the advent of the internet, GRPN stock may have appealed to investors. However, the underlying business of providing discounts to online consumers is a graying one. After all, it doesn’t take much for organizations to directly market their discounts, given the mass presence of social media.
But now? I think Politico.com said it best in one of their earlier articles about the coronavirus’ economic impact: “Millions of Americans are out of work, most others are slashing their spending and businesses are getting crushed.”
In this paradigm, it doesn’t matter how steep your discounts are – nobody’s buying anything except food and water. And as I mentioned near the top, most Americans are essentially prioritizing their health over their finances. Therefore, I must relegate GRPN stock into my list of stocks to sell.
Stocks to Sell: Goodyear Tire (GT)
With so much talk about the oil industry, it’s worth noting that this one segment has significant reach to other markets. One of them is an important yet frequently overlooked one: vulcanization. This brings me to Goodyear Tire (NASDAQ:GT), which is one of the hardest-hit stocks to sell on this list. Currently, GT stock is down 44% yet it may face downside pressure in the months ahead.
Why? To be blunt, who the heck is driving these days?
Plus, even in the best of times, many drivers often stretched the capacity of their tires beyond their manufacturer’s recommendations. With limited economic activity and the specter of a second wave of coronavirus hitting the U.S., buying new tires is the last item on people’s priorities.
Beyond that, we must consider the economic impact of millions of Americans out of work. Purchasing pricey tires is just not on the agenda, which invariably hurts GT stock.
Now that JC Penney (OTCMKTS:JCPNQ) has filed for bankruptcy, it’s time to consider other formerly iconic retailers for your list of stocks to sell. A name that has been coming up on my radar is Macy’s (NYSE:M). For years, the narrative for big department stores has been waning due to the rise of ecommerce. However, M stock represented an investment toward an attribute that online retailers couldn’t touch – the social experience.
But in the new normal, that experience has become a painful liability. According to a report from Kpbs.org, Macy’s expects to lose up to $1.1 billion in its first quarter. It’s not just about the quarantines, which didn’t help. Whatever consumer discretionary demand existed went to popular online merchandise providers or to big-box retailers. It’s difficult to see how M stock recovers from that loss.
Also, Macy’s stores are typically anchored to shopping malls that feature popular entertainment venues, most notably movie theaters. But with very limited capacity and the first major film release date set for late July, this retailer may have more pain ahead. Given such a dire outlook, M unfortunately belongs in this list of stocks to sell.
Stocks to Sell: General Electric (GE)
In April, General Electric (NYSE:GE) warned that the hoped-for air travel rebound likely won’t happen soon. Now, the storyline has shifted. With airliners gambling that travel demand will return for the typically busy summer season, their equity values have likewise skyrocketed. Being an engine provider, what’s good for the airlines is invariably good for GE stock.
But let’s be brutally cynical here. These shifting projections can also flip-flop back to their original implications. As we move toward the heart of the summer season, many factors can change. In other words, intentions don’t guarantee anything, leaving GE stock still stuck in a quandary.
The biggest concern, though, is that travel demand – will recovering from this year’s lows – is still a fraction of their year-ago levels. To me, this suggests that it’s not just the health headwind that’s impacting consumer sentiment. Instead, other factors, such as financial pressure, are dissuading air travel.
But with the real possibility of another wave of Covid-19 hitting us, the message is clear: General Electric is clearly a candidate for stocks to sell.
Global Eagle Entertainment (ENT)
Specializing in developing inflight entertainment systems for airliners, Global Eagle Entertainment (NASDAQ:ENT) has been one of the worst-hit stocks to sell during the desperate hours of the coronavirus pandemic. Obviously, with airliners taking a beating, demand for auxiliary components cratered. Not surprisingly, ENT stock is barely hanging on by a thread.
However, contrarians might be tempted to take a swing. That’s because air travel volume has picked up since this year’s lows. Still, I wouldn’t be too quick on the trigger. On a year-over-year comparison, airline passenger volume has been decimated. Unfortunately, this may not move substantially enough to save ENT stock from disaster.
You just have to do the simple math. Currently, passengers are flying at about 16% of the levels seen in the year-ago period. Sadly, this means that there are too many competitors in the field and not enough demand to justify their existence.
You don’t have to be an economics expert to realize that Global Eagle Entertainment is an “easy” fit among stocks to sell. And the recent spike up in shares unfortunately doesn’t change this fundamental reality.
Stocks to Sell: AG Mortgage Investment Trust (MITT)
A hybrid mortgage REIT, AG Mortgage Investment Trust (NYSE:MITT) has “opportunistic” exposure to residential and commercial investments. Such a platform might have appealed to some risk-tolerant buyers during a bull market. But in a time like this, MITT stock could very well be a harbinger for the broader underlying industry.
One of the most worrying aspects of the April jobs report is that the economic fallout has disproportionately impacted communities of color. But in the last few years up until this crisis, these same communities experienced an outsized jump in homeownership rates, according to the U.S. Census Bureau. Therefore, the probability of a real estate recovery is not as credible unless this imbalance is addressed.
That leaves MITT stock in limbo since the rest of the economy is in bad shape. With so many variables, I’d rather leave this name in my list of stocks to sell.
For those that think this economic crisis is just like any other emergency situation, consider Cinemark (NYSE:CNK). During the depths of the Great Recession, The New Yorker’s James Surowiecki opined that “movies really are recession-proof.” In fact, if you had bought CNK stock when Surowiecki originally wrote the piece and sold it early this year, you’d be looking at a very handsome profit.
Now, Cinemark is a candidate for stocks to sell just so that you can salvage any value from it. Historically, Hollywood benefited during times of economic turmoil because movies provided escapism. However, when all movie theaters closed, that escapism has left the room. Even with most states opening their economies, so long as high-profile states like California and New York impose restrictions on large gatherings, the movie industry will remain troubled.
Interestingly, most moviegoers will return to the box office, so long as safety protocols are in place. That’s a double-edged sword for CNK stock in that pent-up demand, while positive, cannot be fully actualized due to necessary capacity limitations. This is a tricky situation that makes the movie industry inappropriate for risk-averse investors.
Stocks to Sell: Spirit AeroSystems (SPR)
At the start of the year, shares of Spirit AeroSystems (NYSE:SPR) were trading above $70. At time of writing, they’re just above $31 thanks to a resurgence of sentiment toward the airline industry. However, I wouldn’t assume that the worst is over for SPR stock.
Outside of the oil industry, few sectors have been as hard hit as airliners. With Spirit providing advanced technologies and equipment for these companies, the devastation simply trickled down. Sure, the economy is beginning to reopen but passengers are still avoiding travel. According to screening data from the Transportation Security Administration, airline passenger volume for the month so far is roughly about 20% of the year-ago level.
Yes, it’s a big improvement from April’s lows. But this current capacity is utterly devastating.
One of the reasons I say that – aside from the obvious – is that Spirit geared their long-term strategy on the assumption of robust growth in air travel. Now, that’s a big question mark, demoting SPR in this list of stocks to sell.
SeaWorld Entertainment (SEAS)
Following the damning documentary “Blackfish,” SeaWorld Entertainment (NYSE:SEAS) has been fighting to win back public trust. After a hugely negative impact to SEAS stock, the world-famous theme park was on an impressive recovery path. Without the Covid-19 pandemic, it’s very possible that SeaWorld could have secured new plateaus.
As it stands, SEAS stock is drifting aimlessly along with other stocks to sell. I’m not sure where SeaWorld goes from here. In 2019, 22.6 million people visited its parks in the U.S. Now, management can kiss that improving metric goodbye.
The latest news indicates that management hopes to reopen the SeaWorld theme park in mid-June. As my friend used to say, you can hope in one hand and do “number two” in the other – which one fills up faster? Besides, the reopening would have to be done responsibly, which equates to lower revenues.
Stocks to Sell: Carnival (CCL)
A giant petri dish in the best of times, the allure and romance of cruise ships has always had a dark side. But the coronavirus may be the biggest black eye to the industry and individual operators like Carnival (NYSE:CCL). Some folks might view the horrific losses of CCL stock as a discounted opportunity. While the contrarian in me wants to agree, I’m hesitant.
For a start, Carnival owns the stricken Diamond Princess ship that started it all. What started as one person getting ill turned into an unprecedented quarantine and a real-time human experimentation. I’m not sure you can just recover from that black eye.
Moreover, the idea that government agencies can forcibly quarantine you – while on vacation no less – is a scary thought. For many, it has become a reality. Sadly, CCL stock belongs among the ranks of stocks to sell unless a miracle occurs.
To set expectations, recent headlines suggest a miracle does not appear to be over the horizon but instead a curse.
Avis Budget Group (CAR)
Prior to the coronavirus, Avis Budget Group (NASDAQ:CAR) endured disruptive pressure from ride-sharing apps. Let’s face it – traveling anywhere, even in your home country, can be stressful. Driving in a new area, you have to worry about getting lost, for one thing. Additionally, some folks just don’t want to deal with hassles like traffic. Thus, CAR stock has been choppy over the past few years.
Today, I’m not sure what to make of Avis. True, there is an argument that once the economy returns to normal, CAR stock will rebound. And at these levels, it doesn’t need to rebound near multi-year highs to secure a handsome profit.
Further, the bankruptcy of Hertz Global (NYSE:HTZ) gives Avis a cynical leg up. But I’m not sure if this is a cause for celebration. With the decimation of demand in the air travel industry, I don’t have confidence in Avis. Thus, anything to do with car rentals tempts its entry in a portfolio of stocks to sell.
Stocks to Sell: Spirit Airlines (SAVE)
A company with an unfortunately ironic ticker symbol, Spirit Airlines (NYSE:SAVE) benefited from its discount rates during the pre-coronavirus era. But in the economic fallout following a pandemic, I’m just not sure how viable SAVE stock would be.
Yes, the government bailout for the airline industry is a confidence boost. That’s one of the reasons why SAVE stock bounced higher after hitting a bottom in the second half of March. The other, as I mentioned several times above, is renewed sentiment for airliners. However, the consumer economy would need to improve drastically before I consider removing shares from this list of stocks to sell.
Mainly, airliners face the same problem as the oil market: no scheme can magically engineer demand. Yes, projections are great but until actual butts are in the seats, you don’t want to get too excited. Plus, even with companies discounting their fares to insane levels, many people simply don’t want to fly due to the many uncertainties.
MGM Resorts (MGM)
For casino stocks to sell, I’ve focused my attention on lesser-known organizations. However, don’t think that I’m just picking on the small guys. In this new normal, you should also be extremely skeptical about the majors like MGM Resorts (NYSE:MGM). Since the beginning of this year, MGM stock has bled red ink. And I’m not sure if the pain is over.
Las Vegas, which MGM calls home, depends on huge, carefree crowds willing to spend their troubles away – and they do generously. Otherwise, Las Vegas is a disgustingly hot wasteland with no point to its existence. That’s why Sin City is so vital to the Nevada economy.
To be fair, the Silver State has taken its first steps to reopening its economy. Recently, Vegas has opened its doors to what it’s most famous for – gambling. Although deeply mitigated, many people flocked to the casinos, likely because they’ve been cooped up in their homes for months.
But how dependable is this recent catalyst for MGM stock? The thing is, Vegas is known as a party town. These social distancing and mitigation protocols represent the antithesis of what makes this city move. Therefore, I’m still skeptical and recent news only emboldens my apprehensions.
Stocks to Sell: Sigma Labs (SGLB)
Under any other circumstance, I believe Sigma Labs (NASDAQ:SGLB) would make an interesting, though risky contrarian pick. Unfortunately, the pandemic did a number on SGLB stock, which was briefly trading at double-digit prices early this year. But when Covid-19 spread across the nation, shares found themselves tumbling into the low single digits.
Sigma specializes in advanced 3D printing and additive manufacturing, specifically for the aerospace and defense industries. Logically, the former is a bit of a problem. With the present crisis destroying demand for all but the essentials, Sigma suddenly finds itself as part of an underappreciated supply chain. And recent enthusiasm over airliner projections of future demand doesn’t change this dynamic.
To be fair, the defense component may offer some help for SGLB stock. However, with record government spending, even the defense industry may need to scale back. Given the variables involved, I really have no choice but to transfer shares to this list of stocks to sell.
Harley Davidson (HOG)
If Harley Davidson (NYSE:HOG) investors are as tough as their riders, I’m putting myself at risk for mentioning this American icon in this context. But if we’re being completely fair, HOG stock has been on a deathwatch for quite some time. Unfortunately, it has nothing to do with Harley Davidson’s products, which would be an easy fix. Rather, it’s a cultural problem.
To be blunt, millennials just don’t care about motorcycles. Unlike prior generations, they lack vehicular fascination. Over the years, this dynamic has plagued automakers. Imagine how motorcycle manufacturers feel, knowing that their products are discretionary. Therefore, even before the pandemic, there was an argument for HOG belonging in a list of stocks to sell.
But during this crisis, I don’t see many paths for recovery for HOG stock. The last time shares were consistently relevant were in the years leading up to the Great Recession. Now, it’s too much of a risk gambling against a shifting consumer environment.
Stocks to Sell: Willis Lease Finance Corporation (WLFC)
Despite this huge list of deathwatch stocks to sell, I like to think of myself as an optimistic person. Frankly, many of these companies listed here aren’t terrible by nature. Instead, the coronavirus has disproportionately impacted their business. Willis Lease Finance Corporation (NASDAQ:WLFC) falls into this category.
Willis offers aviation services, specifically the leasing of spare aircraft engines to commercial airliners. During the old normal, this business worked because of increasing volumes. As such, Willis acquired one of the largest engine portfolios in the industry. Before the pandemic, WLFC stock was on an unquestioned growth trek.
Tragically, everything changed in March of this year. With airliners grounding most of their fleet, these companies didn’t have much use for their planes, let alone spare parts. Almost overnight, the paradigm completely shifted for WLFC stock.
It’s possible that air travel could come roaring back. But with lingering health concerns, along with severe economic troubles, I highly doubt it. And no, positive projections do not count as evidence that the industry is turning around.
Scorpio Bulkers (SALT)
One of the realities of this pandemic is that our government’s stimulus funds, no matter how well meaning, failed to spark inflation (demand) in most sectors outside of groceries. Put another way, we’re not in a consumption mode, which doesn’t bode well for Scorpio Bulkers (NYSE:SALT).
As a leading international provider of marine transportation of dry bulk commodities, Scorpio really needs a bull market for SALT stock to get out of its funk. Sadly, I don’t see a realistic picture where sentiment will return anytime soon. As the New York Times reported, the coronavirus did a number on the international shipping business. Plus, it wasn’t like this industry wasn’t without problems before the virus struck.
Even as the world heads toward a recovery path, the case for SALT stock is still challenging. That’s because tensions are rising between the U.S. and China, which would likely be a negative for international shipping. Therefore, the safe play is to not play games with Scorpio Bulkers if you don’t have to.
Stocks to Sell: Amarin (AMRN)
As one of the most popular publicly traded pharmaceutical companies in the pre-pandemic era, Amarin (NASDAQ:AMRN) has a very loyal following, particularly because they believe strongly in the company’s flagship drug Vascepa. Thus, putting AMRN stock on a deathwatch could very well result in me getting a death threat. It is what it is.
Aside from the extracurricular drama associated with the company, it’s hard not to have a dim view on its outlook. In March of this year, a “Nevada district judge on Monday invalidated the key patents protecting Vascepa, opening the door for other drugmakers to roll out generic versions of the blockbuster in the U.S.,” according to Kyle Blankenship of Fiercepharma.com.
Of course, Amarin will do everything in its power to address this unfavorable outcome. As well, generic competitors will have their own challenges in forwarding an approved alternative. But with the coronavirus impact, investor tastes have shifted dramatically.
AMRN stock could make a comeback later on as things settle down. But when that will be is anyone’s guess.
Recro Pharma (REPH)
In another time, Recro Pharma (NASDAQ:REPH) may intrigue investors because it plays an important role in the pharmaceutical supply chain. Featuring a massive oral solid dose development and manufacturing facility, Recro offers analytics, quality control and packaging services for drug makers, among many other capabilities. Therefore, at some point, you’d figure REPH stock will make a comeback.
For now, I’ve got to be cautious and list Recro Pharma in this list of stocks to sell or at least avoid until the coast clears. Presently, the pharmaceutical and biotechnology sectors are focused on the coronavirus. You can tell how important this is to Wall Street when the mere possibility of a vaccine is enough to excite investors.
However, this leaves REPH stock in the shadows and we don’t know when it will reemerge. With the specter of a second wave of coronavirus hitting us, it’s probably better to take the conservative approach.
Callaway Golf (ELY)
If you’re worried about your golf game, you live a very sheltered life. And that’s one of the reasons why Callaway Golf (NYSE:ELY) suddenly finds itself stuck with hurting stocks to sell. Golf is truly a rich person’s sport. In this environment, if you’re caught playing it, that could be a problem because it may single you out as a robbery target. So that’s one strike against ELY stock.
While shares have moved significantly higher since cratering in March, I’m still skeptical. With people claiming unemployment benefits still running in the millions per week, eventually, the economic downturn will impact higher-paid workers. In this scenario, golf is an easy item to remove from one’s budget. Again, we’re already seeing evidence of the affluent cutting their spending.
Finally, golf tends to attract an older crowd and this demographic is most at risk for a Covid-19 infection. The pandemic may end up changing people’s tastes, for the worse in Callaway’s case. Therefore, the present rally of ELY stock could be a trap.
Lindblad Expeditions (LIND)
With zero incentive to go on a vacation, the entire travel industry has found itself on a widening portfolio of stocks to sell. But extravagant journeys that take you to far off places like Antarctica? Oh yeah, that’s a goner for sure. This is the reason why I’m giving the boot to Lindblad Expeditions (NASDAQ:LIND). Under these global market conditions, no room exists for LIND stock.
When the economy was working – at least for the upwardly mobile – Lindblad had speculative but compelling appeal. Who wouldn’t want to be counted among the few humans to step foot on Antarctica? But spending tens of thousands of dollars does not make sense in this crisis. Therefore, I’m forced to abandon ship on LIND stock.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.