Historically, September is one of the worst performing months of the year. According to Investopedia, if you take monthly performance figures of each of the major U.S. averages since 1950, you find that the Dow Jones Industrial Average loses 1.1% during September on average; the S&P 500 loses 0.7% and the Nasdaq (since its inception in 1971) loses about 1%.
Marketwatch went back 100 years and found similar results.
With this in mind, I thought it would be better to concentrate on what to sell rather than what to buy, especially given the clean-up of Harvey and its effect on oil prices, as well as the coming onslaught of Irma in Florida and perhaps the entire Southeast.
These seven F-rated stocks you should ditch with haste come from a number of different sectors. These are companies that are having hard times in markets that aren’t going to do them any favors.
Remember, the traders on the Street know that September is about positioning for the end of the year, when they get their big bonuses. This is when they start to dump their losers and focus on the winners. And that’s precisely what you should be doing as well.
F-Rated Stocks to Sell: Dentsply Sirona (XRAY)
Dentsply Sirona Inc (NASDAQ:XRAY) stock lost 8% when it announced its Q2 earnings.
Not only were earnings disappointing, but the company announced that it was lowering guidance for the rest of the year.
In this market, at this point in time, that is not a good sign. You will be punished. Bear in mind, this is a big player in the dental supply world, with a $13 billion market cap.
The problem is, many of the sectors where it was an industry leader are now being encroached upon by competitors. While XRAY was the player, now it has to compete on price as well as delivery, which will hurt margins. And that’s what is evident in its latest quarterly report.
Plus, since it’s a big player in the space, it’s unlikely anyone is interested in buying it at a premium — they’ll wait until it’s on sale.
F-Rated Stocks to Sell: NuStar Energy (NS)
NuStar Energy L.P. (NYSE:NS) is a limited partnership, which means it technically doesn’t pay out dividends to shareholders, it pays out capital in the form of dividends, since shareholders are treated as partners.
What this means is, limited partnerships usually have very impressive dividends. In the case of NS stock, the ‘dividend’ is 10.9% right now.
The problem is, the stock is off 19% year-to-date and things are looking worse on two counts.
First, it has continued to lower estimates for the quarter and year going forward, which is never bullish. Second, it is based in San Antonio, so this midstream energy company’s pipelines will see even more trouble given the wrath of Hurricane Harvey and its aftermath.
NS was behind the eight ball before Harvey and now it’s even worse off.
F-Rated Stocks to Sell: Mack Cali Realty (CLI)
Mack Cali Realty Corp (NYSE:CLI) stock has been struggling this year and it looks like it will continue to find a way back to growth.
CLI is a real estate investment trust (REIT), which means it pays out 90% of its profits in dividends.
REITs are usually solid investments for income-focused investors. But that doesn’t mean all REITs are good choices.
While its name might give you the impression that its properties are located in California, CLI actually is based in Jersey City, NJ and owns multi-family housing and commercial real estate in the Northeast.
Earnings and guidance have been moving down through 2017, and that doesn’t look to change. Its 3.4% dividend is nice, but the stock is off almost 19% year-to-date, so it’s cold comfort.
Add to that a growing debt load and you have a pretty risky stock in a usually safe sector.
F-Rated Stocks to Sell: CBL & Associates (CBL)
CBL & Associates Properties, Inc. (NYSE:CBL) stock is delivering a 13% dividend, which may look tempting. But don’t bite.
CBL stock is off more than twice that much year-to-date.
And, as the price of the stock tanks and the dividend soars, that juicy dividend gets more unsustainable.
CBL is a REIT that owns and manages shopping malls and as you know, brick and mortar retail is not a good business right now. As major retailers close stores, it’s going to take a while for the REITs that own the malls to pivot to new clients. And as the closings continue to pile up, it means CBL and other REITs need to move faster to stay afloat.
And if the store closings don’t get CBL, then a dividend cut may. At some point, if the tailspin continues, CBL won’t have the cash to pay out its growing dividend. And you don’t want to be there when that happens.
F-Rated Stocks to Sell: Chicago Bridge & Iron Company (CBI)
Chicago Bridge & Iron Company NV (NYSE:CBI) stock has plunged 55% year to date, so it’s no surprise it made it to this article.
There are two key reasons for its swoon this year.
The bigger macro reason is it was bid up as a great play during the Trump rally that started after the election. One of the key platform goals was to put together a massive infrastructure stimulus plan for the U.S.
CBI would have been a big beneficiary of that. But it hasn’t happened. So all the premium that was built into the stock has begun to evaporate as Chicago Bridge & Iron Company earnings have not kept up with expectations at any point this year.
Second, CBI stock recently cut its dividend, which is a giant flashing red light that the company is down to its worst possible choices to keep the ship seaworthy. Stay away for now.
F-Rated Stocks to Sell: Frontline Ltd (FRO)
Frontline Ltd. (NYSE:FRO) is a tanker company that transports crude oil and oil products.
FRO stock is currently throwing off a massive 23% dividend yield.
This isn’t really that surprising because tanker stocks are historically volatile as fuel shipments have their busy seasons and slow seasons.
The problem is, tanker companies have been having trouble for years, so even their busy seasons have been slow, due to the global economic slowdown.
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And even FRO’s 23% doesn’t help when the stock has dropped 24% in the past year and FRO has warned that the next few quarters don’t look very promising. That also means the dividend is likely to be cut at some point and anyone who is currently treading water will be sunk, fast.
F-Rated Stocks to Sell: Noble Corporation (NE)
Noble Corporation Ordinary Shares (UK) (NYSE:NE) stock has been pummeled this year, off 42% year-to-date.
Now, NE has been around for a century, so it’s not going to disappear, but that doesn’t mean this offshore driller is in any shape to rally any time in the future.
In the U.S., the Gulf of Mexico rigs were hit by Harvey, and even if it’s just getting them back online (which it isn’t), that is going to make for a tough quarter since revenue and earnings will take a hit.
And given the sluggish global economy, it’s not like running offshore rigs at capacity is even realistic now. Plus, political unrest in African nations doesn’t help operations there stay consistent.
And now with more hurricanes in store for the U.S., offshore rigs — and NE stock — may get pounded even more.
— Louis Navellier
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Source: Investor Place