Wednesday, July 17, 2013

10 stocks I would never buy

Instead of thinking about stocks that you would want to buy, have you ever thought of stocks that you absolutely don't want in your portfolio? Usually I give stock and/or trading recommendations but this time I compiled a list of stocks that are out of the question for my portfolio. Years ago I wrote an article about the same stocks that are still on my 'blacklist' today. That was when SEARS (SHLD) was trading well over $80 a share for example, now it's almost half that price. I believe a few companies back then, also on my infamous list, were Blockbuster and Circuit City - we all know what happened with them.

Most are in the retailer sector

Most stocks are in the retail sector. That has to do with the simple fact that I foresee that the retail sector, as it exists today, will become obsolete in the near future. Stores are downsizing, while the big retailers such as BEST BUY (BBY), another one on my 'blacklist', get a lot of 'lookers', those who use the place to scout out the products that they eventually are going to buy for way less online. That's is also where the change is happening. Online shopping is becoming more and more popular, renting movies online is something that's common now, who needs a video store for that? That same trend goes for non-food stores, and mainly luxury items such as electronics, clothing and jewelry. Huge (Outdoor) shopping malls will eventually become a thing of the past, so I'm aiming on stocks that can be affected in this scenario like Macy's (M), Sears (SHLD), Nordstrom (JWN) and such. In the near future these companies will have to severely downsize if they want to survive, but that is not necessarily a bad thing. Sure, you won't be able to house as many products, but you will save a lot of money on heating/cooling costs, rent, transportation, wages etc. These are savings on guaranteed expenses.

Despite the fact that some of these stores adapt to online selling, like Sears, the downward trend seems to continue - which is not a good sign at all, it reminds me of Blockbuster and their last attempt to survive by offering DVD's in the mail, like Netflix. This is not to say that short- mid- term trades will not be profitable. Of course there are short term buying opportunities that these stocks offer, but I wouldn't want to invest in Best Buy for example.

Here are the ten stocks (in no particular order) that I absolutely do not want in my portfolio:

  • Best Buy (BBY)
  • Radioshack (RSH)
  • Sears (SHLD)
  • Macy's (M)
  • Steinmart (SMRT)
  • Urban Outfitters (URBN)
  • American Apparel (APP
  • Sprint (S)
  • Tiffany & Co (TIF)
  • Rite Aid (RAD)

Then which sectors should I put my money?

On the other hand, these are the sectors and companies that do have growth potential, like healthcare (THC) and technology (AAPL), also the food sector has many opportunities (MCD), but again - stay away from retail!

No comments:

Post a Comment


All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.