Recently, several companies have seen their stocks fall into the stocks to sell category simply due to supply chain disruptions. And that’s not a huge surprise. After all, with the winding down of the pandemic, the world economy is looking to pivot quickly towards growth.
Businesses are adding jobs at a healthy rate, as the consumers are looking to spend the savings they accumulated during the pandemic. The pandemic-induced disruptions are fading away, but the massive upsurge in demand has made it incredibly difficult for businesses to control the proceedings.
Due to the rampant increase in demand, there is a shortage of several inputs for various businesses. Perhaps the most talked about is the semiconductor shortage that impacted the automobile and tech industry.
However, a wide variety of raw materials, including plastic, lumber, household items, natural gas, poultry, and others, are in shortage as well.
These shortages and supply-chain disruptions are likely to be transitory, though. Nevertheless, the crisis has impacted several stocks and their outlooks. The list below includes three stocks to sell due to the growing supply chain woes.
Stocks to Sell: Honda Motor Co Ltd (HMC)
Japanese automotive giant Honda Motors has been hit hard by pandemic-related problems. These include a combination of port-related issues, semiconductor shortages, and other raw material shortages.
As a result, it could curb growth considerably this year. HMC stock is likely to maintain its sluggish pace until the end of the year.
Honda halted production in several of its North American operations in March. Most recently, it had to suspend operations in its Asian plants as well due to a parts shortage.
Seiji Kuraishi, Honda’s executive vice president, stated that last year’s chip shortage impacted roughly 100,000 vehicles.
Nevertheless, it would be tough for Honda to ramp up production along with the rest of its peers.
Jinko Solar (JKS)
Jinko Solar is the world’s largest solar panel manufacturer, with an aggregate module of 70GW.
The company had been on an incredible run-up until mid-2020, posting double-digit growth in revenues.
However, recent results have been weighed down considerably by the shortages in solar glass and polysilicon. As a result, JKS stock’s 6-month returns are at a negative 11%.
Jinko recently released its first-quarter results, where its revenues dropped by 6.4% on a year-over-year basis to $1.21 billion.
Moreover, for the second quarter, it expects its revenues to fall in the range of $1.25 billion to $1.20 billion versus the consensus of $1.42 billion.
The supply shortages have led to significant delays in panel installations, which have earnings results ultimately. However, the long-run bull case for Jinko is intact, but expect a bumpy road for JKS stock for the foreseeable future.
Stocks to Sell: Avis Budget (CAR)
Avis Budget is one of the leaders in the car rental industry, operating around the world with massive fleets of vehicles.
Its business has grown sluggishly in the past few years, but its woes have been exacerbated immensely by the pandemic-led supply chain disruptions.
In the past four quarters, the company has witnessed a double-digit drop in revenue growth.
In its first quarter, its revenues dropped by 21.7% on a year-over-year basis. Moreover, its net loss widened by 8% in the quarter.
The management failed to guide for the full year due to the ongoing semiconductor shortage.
Hence, CAR stock will continue to be a risky bet until there is a major improvement in its external environment.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.