Expect these stocks to get even worse.
Jitters over the trade war sent the S&P 500 index down 3.3% in May as dozens of stocks tumbled to near 52-week lows. For some stocks, the trade war dip will ultimately serve as a buying opportunity. However, just because a stock is cheap doesn't necessarily mean it's a value. Stocks often underperform for good reason and even stocks at 52-week lows can go much lower. Here are nine stocks that the CFRA analyst team says investors shouldn't be buying even at their lowest prices of the past year.
CenturyLink (ticker: CTL)
CenturyLink is a U.S. telecommunications company. Analyst Keith Snyder says investors should stay away from CenturyLink, even with the stock down 40% in the past year and its dividend yield up to 9.5%. Revenue was down 5% in the first quarter and Snyder says voice revenues will continue to decline for the foreseeable future. Without details on the structure, timing or financial impact of its recently announced strategic alternative project for its consumer segment, Snyder says investors should remain skeptical. CFRA has a "sell" rating and $9 price target for CTL stock.
Gap is one of several U.S. retail stocks that have been pounded in the past year. Gap shares are down 42% in the last year and near 52-week lows, but analyst Camilla Yanushevsky says it's still too early to buy the dip. On May 23, Yanushevsky upgraded Gap from "sell" to "neutral," but she said the entire Gap brand portfolio remains challenged. After the recent sell-off, Gap shares may have limited additional downside, but Yanushevsky says the proposed spinoff of Old Navy will pressure margins and potentially eliminate synergies. CFRA has a $23 price target for GPS stock.
Kohl's Corp. (KSS)
Like Gap, Kohl's stock has dipped 36% in the last 12 months. Yanushevsky downgraded Kohl's stock from "neutral" to "sell" following its first-quarter earnings report. Kohl's same-store sales decline of 3.4% was the worst quarter the company has reported in the past three years. Kohl's blamed the weak numbers on inclement weather, but Yanushevsky says they are likely a reflection of poor returns from recent growth initiatives. She also has low expectations for partnerships with Aldi, Planet Fitness (PLNT) and Weight Watchers International (WW). CFRA has a $50 price target for KSS stock.
Nissan Motor Co. (NSANY)
The global auto industry seems to be entrenched in a cyclical decline. Analyst Hazim Bahari says Nissan's rising material costs and the ongoing trade war will drive profit margins down to around 2.5% for fiscal 2020, their lowest level in a decade. Bahari says aging model designs will continue to hurt Nissan's sales growth and expenses associated with new model development will eat into near-term cash flow. Fiscal 2019 earnings per share dropped 57% and full-year revenue was down 3%. CFRA has a "sell" rating and $12 price target for NSANY stock.
Tanger Factory Outlet Centers (SKT)
Tanger Factory Outlet Centers shares are down 26% in the last 12 months amid the broad retail weakness and analyst Chris Kuiper says there's still little reason for optimism in the near term. In the first quarter, same-center sales once again declined by 0.5% and consolidated portfolio occupancy dropped 0.5% to 95.4%. Guidance implied further decline in occupancy to below 94.6%. Kuiper says Tanger will continue to face occupancy headwinds given additional retail closures. CFRA has a "sell" rating and $18 price target for SKT stock.
Tailored Brands (TLRD)
Tailored Brands is the parent company of men's apparel brands Men's Wearhouse and Joseph A. Bank. Yanushevsky says Tailored Brands is losing market share to Lululemon Athletica (LULU) as corporate dress codes get more relaxed and Tailored Brands falls behind in fabric innovation. Tailored's ability to invest to compete is limited given its bloated balance sheet, which includes $1.2 billion in debt and net cash of just $55 million. Yanushevsky says the stock's 13.2% dividend yield is little more than a value trap. CFRA has a "sell" rating and $6 price target for TLRD stock.
Tesla stock is down 37% year-to-date and briefly fell below $200 for the first time since 2016 as a growing number of analysts have begun to question near-term demand for Tesla vehicles. Analyst Garrett Nelson says Tesla has no near-term bullish catalysts to stop the bleeding and will likely cut its full-year sales guidance at some point. The company's recent capital raise eliminates liquidity issues for the time being, but Nelson says vehicle sales and margins remain the key problems for Tesla investors. CFRA has a "sell" rating and $150 price target for TSLA stock.
Tupperware Brands Corp. (TUP)
Analyst Kenneth Leon says weak sales in the largest international Tupperware markets will continue to stifle growth. At the same time, total debt was up 9.3% to $971 million in the first quarter. Cash from operations was just $40 million compared to $34 million paid out to support its 5.1% dividend. Tupperware shares are down 54.8% in the past year. Leon says the dividend is top priority, but sales will decline by at least 4% this year. CFRA has a "sell" rating and $20 price target for TUP stock.
Visteon Corp. (VC)
Visteon is an auto parts supplier that produces connected-car technology and other electronic vehicle components. Shares are down 60% in the past year, and Nelson says there's no relief in sight in the near term. Revenue was down 9.5% in the first quarter and gross margins contracted by 6.8%. Headwinds include lower vehicle production, a difficult pricing environment and unfavorable currency dynamics. Visteon has a large exposure to the China, which is extremely weak given the ongoing trade war. CFRA has a "sell" rating and $50 price target for VC stock.
Avoid these stocks for now.
-- CenturyLink (CTL)
-- Gap (GPS)
-- Kohl's Corp. (KSS)
-- Nissan Motor Co. (NSANY)
-- Tanger Factory Outlet Centers (SKT)
-- Tailored Brands (TLRD)
-- Tesla (TSLA)
-- Tupperware Brands Corp. (TUP)
-- Visteon Corp. (VC)
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