[Editor’s Note: “30 Stocks on a Deathwatch” was originally published in March 2020. It is regularly updated to include the most relevant information.]
In the middle of the turmoil brought on by the novel coronavirus, it’s hard to think positively. Yet at some point, we will get through this, remembering this moment years from now as one of the darkest chapters in American history. Nevertheless, we shouldn’t be naïve. As I’ve mentioned in prior articles, the coronavirus has turned into an econovirus, one that necessitates examining stocks to sell.
Though I’m proud to be a citizen of this country, I’m also a realist. Like all my InvestorPlace colleagues, I firmly believe we will get through this. But contrary to some opinions out there, I think the cost to get back to some semblance of normal will be paradigm shattering. Thus, it’s important to have a cold, rational attitude toward stocks to sell: it’s either you or it’s them.
While President Donald Trump has signed a historic $2 trillion stimulus package into law, do not be fooled: this effort falls far short of what’s actually needed. And though it’s true that some states are now relaxing their stay-at-home orders, most Americans want these initiatives in place until the coast is truly clear. That means the economy will probably take longer to recover.
Admittedly, the stimulus bill will help. But $1,200 per qualifying adult isn’t going to cut it. According to the Bureau of Labor Statistics, we spent an average of slightly over $20,000 in housing expenditures. That works out to over $1,674 a month, leaving very little for other expenses in a two-adult household.
Put another way, it’s time to consider these “deathwatch” stocks to sell.
Nabors Industries (NBR)
At time of writing, Nabors Industries (NYSE:NBR) is the worst performer on a year-to-date basis, according to Barcharts.com. That’s not surprising, given that Nabors specializes in oil and gas drilling services. The problem is, drilling for oil is the last thing the world needs. In fact, the company would be doing us all a solid if they would drill the oil back into the earth.
I’m not kidding. There’s a reason why NBR stock has dropped over 91% on a year-to-date basis. Cutting production to unprecedented levels is only part of the story. Truly, we would need to see demand pick up for anyone to have confidence in this sector. But that’s just not happening.
On every level, NBR 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.
Valaris (VAL)
In a bull market, Valaris (NYSE:VAL) may have offered an intriguing case. Specializing in offshore drilling, the company utilizes technologically advanced operations. But in a bear market – and especially one brought on by a black swan event – such innovations are liabilities because of overhead costs. Not surprisingly, VAL stock has hemorrhaged over 93% on a year-to-date basis.
While it might seem like I’m picking on the oil sector for my gallery of stocks to sell, what choice do I have? According to an alarming New York Times report, the world is now facing the prospects of “peak storage.” That is, there’s so much oil that we don’t know if we can store it all.
Indeed, one of the biggest drivers why oil prices dipped below zero and could happen again is that it’s economically nonsensical for entities to buy oil they can’t possibly use. Thus, Valaris has zero point existing right now, which makes VAL stock a 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 more than 83% 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, with so many businesses being forced to shutter temporarily, the commercial real estate market is 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 just because states have already reopened or are reopening soon doesn’t mean this is a guaranteed boost for the restaurant industry. We have a combination of consumer physical and financial health factors that must be carefully monitored before making significant investments in the sector.
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. Thus, you should place 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. So, you should probably cancel your reservation for RUTH stock.
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.
Moving forward, a big question exists as to how the consumer responds, both financially and health-wise. 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.
According to the Washington Post, major cruise liners will not receive stimulus funding. Even if every one of them did, the fiscal support wouldn’t help NCLH stock. Why? I hate to answer a question with a question, but who the heck wants to go on a cruise?
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.
Groupon (GRPN)
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.
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 60% 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.
JC Penney (JCP)
Recently, J.Crew filed for bankruptcy. Please don’t imagine that I have a shocked look on my face because I don’t. Among the stocks to sell, the retail sector has been the ugliest. Unlike oil, some retail segments have no utility. And in such an environment, I don’t have any good feelings about JC Penney (NYSE:JCP) and JCP stock.
In some ways, I feel bad about including it in this list of stocks to sell. To me, it feels like kicking someone when they’re down. However, I decided to write about it because low prices tend to attract contrarians. Let me just say that contrarianism isn’t a bad strategy today. However, JCP stock is a money pit.
What makes this “investment” especially jarring is that JCP was already weak during a bull market. With an unprecedented crisis, the narrative just gets sourer. Not only that, when states fully open their economies, there’s zero guarantee that badly hurt consumers will choose JCP.
Priorities have shifted toward “existential” purchases, which doesn’t favor JC Penney. Don’t fight the tape and throw this former department store icon into your pile of stocks to sell.
Granite Point Mortgage Trust (GPMT)
Specializing in commercial mortgage loans, Granite Point Mortgage Trust (NYSE:GPMT) has unsurprisingly suffered tremendously in the markets. At the same time, it’s also not unreasonable that GPMT stock recently saw a burst of bullish sentiment. With the U.S. government set to deliver unprecedented financial aid, it appears that everybody is taking the coronavirus seriously.
Nevertheless, Granite Point belongs among embattled stocks to sell. Sadly, our ecosystem is on the verge of an unparalleled crisis.
According to the Wall Street Journal, over a six-week period, more than 30 million Americans filed for unemployment benefits. On paper, this implies approximately an 18% unemployment rate. In reality, due to factors such as people being unable to apply for benefits, the rate could be 20% or higher.
In this circumstance, you just can’t trust GPMT stock until the smoke clears. Even then, it’s a risk.
Hertz Global (HTZ)
Forget about stocks to sell. You can file Hertz Global (NYSE:HTZ) under the tagline, are you freaking kidding me? If you thought the oil sector is pointless in this environment – and it is – HTZ stock might as well be a rotary phone. Until major states lift their shelter-in-place orders, Hertz will have very little revenue coming its way.
Even without the lockdowns, I just don’t see how HTZ stock avoids further pain down the road. Given the infectious nature of Covid-19, most folks are voluntarily locking themselves down.
Moreover, what will society look like on the other side? Clearly, the $2 trillion stimulus is not enough if businesses continue to go bankrupt. Tragically, Hertz may be a company that hits every branch of the ugly tree until it’s on life support.
New Home (NWHM)
If there’s any organization that needs a bull market, it’s New Home (NYSE:NWHM). As a “new generation homebuilder,” New Home benefitted from President Trump’s pro-business economic policies. But in the pivotal fourth – and perhaps final – year, Covid-19 changed everything. With that, NWHM stock cratered just like you’d expect.
Sure, recent momentum has substantially boosted shares on a percentage basis. But this largely due to wild and panicked trading. Truth is, Wall Street is in denial. When the full hideousness of the econovirus becomes apparent, NWHM stock will have further to fall.
I’m going to be frank with you: for millions of Americans, particularly within communities of color, they were already in a crisis. Buying a new home is simply not on the agenda. Instead, it’s all about keeping the one you’re living in.
Cinemark (CNK)
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 benefitted during times of economic turmoil because movies provided escapism. However, with all movie theaters closed, that escapism has left the room. Even with some states opening their economies, so long as high-profile states like California and New York remain shuttered, the movie industry will remain troubled.
Perhaps CNK stock may be an undervalued play at some point. Until then, stay away.
Fly Leasing (FLY)
When the economy is rocking and rolling, Fly Leasing (NYSE:FLY) presents an intriguing business. Plying its trade in the global aircraft leasing industry, the company offers 92 airplanes for clients to choose from. But in a sharp downturn, FLY stock is a liability.
Further, no one wants to fly with a pandemic threatening countries everywhere. Not only that, the U.S. Department of State issued a global level 4 health advisory. Essentially, the government wants you to stay put. For once, Washington and the American people are on the same page.
Plus, with airliners facing a severe threat to their existence, now’s not the time to gamble on FLY stock.
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.
Even worse, its flagship parks in San Diego and Orlando are closed due to mandatory shutdown orders. That has caused the company to lose several millions of dollars per month. Obviously, this has “avoid” written all over it.
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.
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.
But what will normal look like? If unemployment hits 30% like some experts fear, Avis must downsize or risk implosion. And as I mentioned, this previously unbelievable figure is a realistic forecast. For me, I see too many variables, which is why you should leave CAR with other 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 with a raging 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. 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. Even with companies discounting their fares to insane levels, 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. Otherwise, Las Vegas is a disgustingly hot wasteland with no point to its existence. Currently, we’re living in a society where people are unable to come, even if they wanted to (and nobody does).
This being the case, MGM stock is a sell until society normalizes. And who knows when that will be?
Triumph Group (TGI)
I admire the brave face that the management team of Triumph Group (NYSE:TGI) is putting on amid the Covid-19 pandemic. Unfortunately, the impact to the company’s business is so severe that no amount of window dressing can overcome the likely volatility that’s about to visit TGI stock.
This is particularly sobering thought because shares are already down some 80% YTD. But the reality is that Triumph specializes in aerospace services, systems and accessories. These are all critical components in a normal economy. But at a time like this, they just don’t matter.
It’s not just that airliner demand has plummeted. Many players in the space have been hit so hard that they’ve resorted to converting their planes for cargo flights. In such a circumstance, it’s best to avoid TGI stock until the smoke clears.
Jack in the Box (JACK)
With the restaurant industry taking it in the chin, I’m not at all surprised that Jack in the Box (NASDAQ:JACK) was one of the worst-hit stocks to sell. To be fair, the company offers limited dining room service, along with drive-thru and delivery options. This brings some comfort to those who just need a bite to eat during this lockdown. However, these efforts had done jack for JACK stock, until April came around. That’s when shares almost doubled.
Still, I’m cautious about Jack in the Box, especially with the coming meat-shortage crisis. It’s really a reprehensible waste because animals will be killed and their carcasses tossed, simply because the economic equation no longer makes sense. But that also implies the consumer economy is very weak, which makes JACK stock susceptible to future volatility.
In my opinion, one of the reasons for the fast-food specialist’s earlier decline is its compensation structure. This is not a problem exclusive to Jack in the Box. Nevertheless, the rank and file in these stores make very little money.
So, in a time of crisis, workers will show up for their shifts, even if they shouldn’t. It poses an awkward question for JACK stock, especially since the underlying company doesn’t have the name recognition of McDonald’s (NYSE:MCD) and other competitors.
TimkenSteel (TMST)
Prior to the coronavirus, I could see myself recommending TimkenSteel (NYSE:TMST). Utilizing their proprietary technologies, TimkenSteel offered highly specialized steel products for the automotive, energy and construction industries. Unfortunately, with the pandemic disrupting every segment of the economy, TMST stock is easily one of the candidates for stocks to sell.
It’s not just about the exposure to affected industries that worries me about TimkenSteel. Rather, the premium that they place on their products no longer makes sense. For instance, the company previously boasted about how their steel products can lead to greater fuel efficiencies for automobiles.
Well, if you look at gasoline prices lately, you can see that fuel efficiency is not that big of a concern. If you needed any more confirmation that TMST stock is a bad bet, consider that shares are down nearly 70% YTD.
Sadly, the markets have spoken. Until the global economy proves otherwise, TimkenSteel belongs on your list of stocks to sell.
Camping World (CWH)
For most folks, Camping World (NYSE:CWH) is the go-to place for your recreational vehicle needs. But from another perspective, CWH stock might as well be an economic barometer. After all, what better way to gauge the strength of the economy than to measure consumers’ willingness to blow their money on crap like RVs?
Unsurprisingly, RV sales hit a bottom for this century in 2009. Since then, sales have progressively moved higher through 2017. In 2018, unit sales dipped 4.1% but kept alive the overall growth trend. Obviously, things will look a lot different when this year’s numbers are tallied.
If the economy suffers unprecedented damage, I’m afraid I can’t justify buying CWH stock. Even with what we know today, I’d rather stick shares into my list of stocks to sell.
Surgery Partners (SGRY)
In the weeks following the coronavirus making a major impact in the U.S., healthcare companies, especially those with some connection to addressing Covid-19, have witnessed astounding bullishness. However, Surgery Partners (NASDAQ:SGRY) was not one of those fortunate organizations. Instead, SGRY stock plummeted, making it one of the nastiest investments among stocks to sell.
Unlike so many of the stocks to sell that round up this list, Surgery Partners has a credible recovery path.
Billed as a leading operator of surgical facilities and ancillary services, the medical firm provides a critical service. Unfortunately, hospital networks in heavily afflicted cities were overwhelmed. In the case of New York City, that involved the 911 emergency system.
But with coronavirus cases appearing to have peaked, SGRY stock has subsequently jumped higher. Nevertheless, I would remain vigilant on this name until we get a better idea of how people will respond to being inside a healthcare facility following a pandemic.
Brookdale Senior Living (BKD)
As the name implies, Brookdale Senior Living (NYSE:BKD) specializes in senior care facilities and services. Under previous, normal circumstances, BKD stock enjoyed a strong fundamental catalyst. With the baby boomer generation retiring in droves, Brookdale seemingly had a wealth of revenue coming its way.
But just like the impact to the cruise liners, BKD stock has taken a beating due to an industry image problem. Before New York became the American epicenter for Covid-19, the state of Washington owned that dubious title. Particularly, elderly citizens in senior care facilities succumbed to the disease while family members watched helplessly.
Ordinarily, you’d think that Americans will just get over this crisis through time. On the other hand, this may be a Great Depression-like event which forever scars impacted people. We’ll just have to wait and see. For now, though, BKD should be left in the dust bin of stocks to sell.
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.
Another is that the entire sports world has shut down. With a lack of marketing opportunities, Callaway will start hurting. Plus, with the almost-inevitable economic downturn, golf is an easy expenditure to eliminate from one’s budget. Simply, ELY stock is an irrelevant investment now.
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.