Playing the stock market can be tricky business and most people will take any tip they can get from people in the know. Morgan Stanley has been in business for a long time and when they have some advice it’s probably wise to listen.
Morgan Stanley has named 37 stocks that they deemed “secularly challenged” and you should probably avoid investing in for the immediate future. Analysts from the leading global financial services firm state that these stocks are “facing challenges that are independent of cyclical trends” for the next 12-18 months. Morgan Stanley believes these stocks carry an “unfavorable risk/reward profile” and their cons outweighed the pros going forward.
Numerous big-name retailers are on Morgan Stanley’s “Do Not Buy” list including Target, Kohl’s, Abercrombie & Fitch, American Eagle Outfitters, DSW, and Gap. Other notable names on the list are Avis rental cars, which has been hurt by ride-sharing apps such as Uber and Lyft. Money transfer giant Western Union is facing new competition from cryptocurrencies. UPS, the multi-billion-dollar corporation, faces threats from e-commerce, its unionized workforce and its integrated network, which could hamper the world’s largest package delivery company. J.M. Smucker Co., the fruit jelly company founded in 1897, is thought to be clinging to their old-school methods which could hurt them competing against trendy private label competitors.
In the tech department, you may want to exercise caution in the following companies: Gogo Inc., a provider of in-flight internet and entertainment for commercial and business aircraft; Akamai Technologies, a company that provides cloud services; SunPower Corp., an American energy company that manufactures solar panels; and NetApp Inc., a California-based storage and data management company.
Here are a few that you should avoid.
Abercrombie & Fitch Co. (ANF – Get Report)
The teen retailer faces structural headwinds that don’t appear to be dissipating anytime soon, including declining and structurally negative mall traffic, apparel price deflation, market share loss to “fast fashion” competitors and decreasing store margins. The namesake brand has comped negatively for the last 22 quarters – that makes it “permanently impaired.”
Akamai Technologies Inc. (AKAM – Get Report)
Cloud services firm Akamai is facing increasing competition in its media segment as computing and networking capacity becomes more ubiquitous. Failure to better utilize investments, increase margins and consider the risk of entering new competitive markets could spell failure.
American Axle & Manufacturing Holdings Inc. (AXL – Get Report)
The auto parts manufacturer has taken what analyst Adam Jonas called an “all-in” stand on traditional auto manufacturing, but as autonomous vehicles become the new norm, AXL could be at risk of being easily replaced.
American Eagle Outfitters (AEO – Get Report)
The teen retailer faces similar problems as Abercrombie & Fitch. But by reducing promotions and increasing average prices, American Eagle is acting like a firm that has increasing traffic – in reality, it doesn’t.
Avis Budget Group Inc. (CAR – Get Report)
As slowing new car demand and rising OEM capacity engender more aggressive new car initiatives, used car prices and fleet costs could come under pressure for this rental car company. Ride sharing firms such as Uber will also have “transformative implications” for the car rental industry.
Bioverativ Inc. (BIVV)
Competition in the hemophelia market will pair with market share pressure from newer entrants to weigh on biotech player Bioverativ.
This report is only the predictions of analysts, so do with this information as you will. You can see all 37 of the stocks you need to avoid over at The Street.
Now that you have a heads up it would be wise to avoid these stocks that will most likely continue to nosedive.