Stocks to Avoid in 2021

-



The pandemic and the rise of the digital age has sped up the decline for companies who haven't adapted to these changes in society. A few of these companies were some of the most successful, but as time  passed they are falling like the Roman Empire.

Two of the most talked about companies in the past month were AMC Entertainment Holdings Inc(AMC) and GameStop Corp. (GME) because investors tried to inflate the stock price. However, these companies don't seem to have a bright future as people switch to digital platforms. 

The closure of movie theatres because of the pandemic was a big blow to AMC as most of their business comes from people going to their movie theatres causing them to lose around $4.6 billion dollars in 2020. Even once COVID-19 starts to die down, people will still be wary going into movie theatres as there are many other options to stream movies safely at home such as Disney Plus, Netflix, Amazon Prime Video, Hulu, HBO Max, and much more. Also, the overpriced concessions will not help the cause too. 

In order for AMC to get back into the game, they need to cut costs and provide services that make the experience of going into a movie theatre better than watching a movie at home. 

GameStop is facing a similar problem as many companies are offering free, online game or games that can be purchased digitally. Less traditional physical copies are being bought, and many stores such as Walmart and Target offer physically copies at similar prices to GameStop. This is a problem that is hurting their sales so GameStop needs to address this in order to stay in the game.

Additionally, their physical stores are costing them a lot of liabilities as most people prefer shopping online than going into a store. Unless they either cut costs or improve their in-store experience, GameStop has a bleak outlook. 

Tanger Factory Outlet Centers Inc(SKT) sadly doesn't have a bright future either because the pandemic has caused outlet centers to close, but even though the outlet centers are opening back up, people are cautious about going back into stores. Online shopping is hurting the amount of customers going into outlet centers, so outlet centers are trying to fight back such as one outlet center near my house offering an indoor ice-skating rink. 

I wish outlet centers could prosper like they did a few decades ago, but the sad reality is that outlet centers will continue to lose money and eventually reach a dead end if they don't come up with something innovative. 

The only bright side about investing in Tanger is their nice dividend of 4%, but it seems like it will be a hot short for most investors.

In their current state, all these companies have a tough future and little hope on becoming prosperous again. Based on the true reality, many investors are shorting these stocks as it seems the most logical decision. On the other hand, by investing in these companies, you could give them the chance to make very good investments and save their company, but if these companies don't capitalize on it, then they are doomed.

Comments

Post a Comment

Popular posts from this blog

Is Iron Mountain Inc (IRM) a safe stock to invest in?

-
Image
  In the wake of the pandemic, people are using technology more than ever whether it is zooming at home or watching Netflix. Consequently, all these technology companies collect data from users in order to help improve their experience or even sell it to 3rd parties. Gathering all this data means that companies have the responsibility to protect the consumer by keeping their data safe from hackers or other entities.  Iron Mountain Inc(IRM) is an international company that "stores, protects and manages, information and assets". Over 7,500 companies use the services provided by Iron Mountain and out of the 7,500 companies, a majority of the companies are in the Fortune 1000. As the world becomes digitalized, more companies will need to use the services provided by IRM which will help their future sales and show that they have the demand in the future.  With a juicy dividend yield of 5.78%, it has similar dividend yields of oil companies, but without the volatility of o...
Read more

Does heavy spending by Oracle signal long term upside?

-
Image
  Oracle (ORCL) has recently increased its investments while many other technology companies right now are cutting down their investments and playing it safe. Oracle is a database and cloud software company based in Austin, Texas, and its main competitors in the cloud industry are Amazon, Microsoft, and Google.  Back in June, Oracle purchased Cerner Corporation, a healthcare records company for roughly $28 billion with the hopes of strengthening its cloud services. Although Oracle only makes up 2% of the cloud market, Oracle aims to compete with Amazon, Microsoft, and Google by building smaller data centers in more regions (Statista). By doing so, Oracle currently has data centers in 40 regions which is almost double the amount AWS has.  Expanding data centers does come at a cost since Oracle has spent over $2.44 billion in capital expenditures during the 2nd Quarter which is a 163% increase in their capital spending. The increase in spending has put Oracle as #1 for the ...
Read more

Micron Technology: One of the Biggest Hidden Stocks of this Year

-
Image
I believe Micron Technology(MU), a semiconductor producer, is a good investment because there is a long-term upside to the stock. Top U.S. semiconductor companies like AMD outsource their semiconductor manufacturing to Asian countries like China, but the U.S. and China’s relationship has soured which is causing the U.S. to focus on production here. To boost U.S. chip manufacturing, Micron has received a subsidy from the Biden administration which has allowed them to expand their market share in semiconductor production by investing $40 billion into building more chip-making factories in the United States. With U.S. companies focusing on buying semiconductors in the United States, Micron's large market share will help them sustain long-term growth in sales. Subsequently, it will boost investor confidence in the stock which will lead to stock gains. Although Micron’s stock has dipped in the past year due to a decrease in computer demand caused by lifted lockdown restrictions, this pr...
Read more