Things are getting pretty precarious in the stock market. There are some worrying statistics that should make you think twice about what you're investing in as the new year approaches.
One of these is that stocks haven’t recorded a 20% drop since the beginning of 2009 – which was the beginning of the long-winded recovery from the Great Recession.
With this in mind, it's important to remember that nothing lasts forever. Despite the fact that there are no obvious indications of a bear market, there are a number of individual stocks that could be in trouble.
Let’s take a look at five stocks that show signs of trouble in the coming months.
3D Systems is a company that does everything to do with 3D printing, from the engineering side of things to manufacturing and selling. The company stock has had a volatile run recently, crashing 12% back in July. Nevertheless, the second-quarter results in August brought it back up a bit.
However, analysts are still concerned about the future of these stocks. The current sell rating is at a price target of $14, which is a decrease of 22% from current levels. Some analysts predict it to be as low as $9, which almost halves the value of the stocks.
The trouble with a company like 3D Systems is that its competition is intensifying. This means that the company will continue to have issues around delivering organic system growth. This is because other companies like HP, Carbon, and GE are aiming directly at their most significant revenue contributors.
This means that if 3D Systems want to stay in the game, they’ll need to increase their spending on direct sales, consulting and customer support. The company also needs to be innovative when it comes to new products if they want to stay ahead. Analysts see continued struggles ahead for this company.
Bed Bath & Beyond
Even giants can fall, and Bed Bath & Beyond is an excellent example of this.
The American home furnishings chain is trading at lows that were last seen all the way back in 2000. Their prices have crashed by as much as 75% in the last five years, and their stock is off 17%.
The sell rating of BBB stock is at a price target of $16. This is a downside potential of almost 12%.
With low levels of profit visibility and margin for the coming months, BBB will have to look at considerable reinvestment if they want to stay afloat. They are putting efforts into increasing the level of transparency between corporate and customer, as well as giving their management team a revamp.
The most pessimistic prediction for BBB is that they are struggling to close the gap with rival Amazon. A significant price discrepancy between these two corporations may result in weak fundamentals for the foreseeable future.
Self-storage company Public Storage may have a nasty surprise in store for investors in the coming months. Analysts have downgraded this company to a sell rating this year, and while their shares have over-performed in the recent past, they now appear to be overextended.
Analysts are currently advising people to sell their shares, and salvage what they can. A $194 price target indicates that Public Storages shares could drop by as much as 10%. Analysts believe that this shows that Public Storage is now under pressure from factors like softer demand and lower take rates.
While Public Storage does remain a dominant player in the storage industry, some of their valuation premium is dissipating near-term. This will continue until growth either recovers or stabilizes. Public Storage has received only one buy rating from analysts over the past three months, while it has also received three sells and three holds.
Analysts have continually downgraded Ralph Lauren since the beginning of 2018. The sell rating has been at a $117 price target, which will result in a fall of 14% in stock price.
Because Ralph Lauren is a part of the fashion outlet industry, their turnaround from current predictions will be tough to execute. The outlet business should continue to place emphasis on full-price sell-through until they're capable of launching a different product by channel. However, there is always a risk that this product may not be different enough.
Ralph Lauren has recently become stale as a brand, especially when compared to peers and competitors. They are experiencing heavy outlet sales at levels that are significantly marked down, bringing the profit margin too close for comfort.
However, analysts believe that management recognizes this as an issue and have their efforts focused on modernizing the brand to re-engage customers.
With RL's stocks being in ‘show me' mode, they've got a long way to go. Only two analysts have expressed anything close to optimism, compared against four sells and four hold calls.
As we know, nothing lasts forever, and no-one is immune to vulnerable stock – even if you're primarily online.
A prominent analyst recently looked at Snap Inc. and predicted a sell rating with a price target of just $9, which is particularly depressing if stocks plummet a further 26% as anticipated.
Even a lift in the second quarter failed to make the analysts feel any better about this company and the future of its stocks. While they showed a growth of 44% in August, domestic growth was disheartening, slumping to 20% from 32%.
There are a number of company risks that don't make Snap Inc. a particularly appealing investment. There is aggressive competition from much larger companies, and the senior management team currently lack the experience to navigate the company through such trying times.
Snap Inc. shares received a surprising three buy ratings over the past month alone. However, this was quickly dwarfed by ten holds and five sells. The outlook isn’t good.
It’s all very well knowing which stocks to shack up with as 2019 approaches. However, you can’t take the good without the bad. Knowing which stocks to look out for may be just as important as knowing which ones to take on.
Don’t jump into the new year and start investing without taking time to do your research. You can start by avoiding these five stocks as predictions indicate that they aren’t poised for a very good year ahead.