Despite Recent Rallies, 3 Stocks I’d Avoid at All Costs

The market’s been rallying this year, and that means that most good and even many bad stocks are moving higher. It may be tempting to buy even the ugly companies out there, but resist the urge. You’re better than that.

Here are three investments that I would avoid at all costs here. Let’s go over why each of those stocks could be a recipe for portfolio disaster…



Selling furniture pieces, mattresses, home appliances, and consumer electronics through a bricks-and-mortar setting is the way many corporate obituaries start these days, but you might be tempted to give Conn’s a shot after eyeing its three-year chart. Shares of Conn’s nearly tripled in 2017, and while they sold off sharply in 2018, the stock is bouncing back in 2019 with a 26% gain year to date.

The problem with Conn’s is that its gains in the past have come from unsustainable catalysts. The stock skyrocketed in 2017 — despite declining sales — as a credit turnaround story. The 125-unit chain decided to eliminate some money-losing product categories and beef up its financing standards. It would no longer sell big-ticket items to deadbeat borrowers, and the end results were improving credit delinquencies and healthier margins.

Results have been weak lately, though mostly as a consequence of Hurricane Harvey in the summer of 2017, sales were boosted in subsequent quarters as folks hit up its stores in impacted areas to replace destroyed belongings. Conn’s is bracing investors for the weakness to continue in the new quarter but turning positive for the entire fiscal year. The long-term issue with Conn’s is that we know how this story ends. Online companies are getting better about selling everything from furniture to next-gen mattresses. Conn’s has probably squeezed the most of its gains as a credit turnaround story, and it can only watch so many of its weaker peers go under before it joins the bankruptcy filing party.


This one is personal, but I have the math to back me up. A couple of years ago, I was giving Gogo a lot of my in-flight money. The provider of airborne connectivity was riding high, and since it seemed to be the platform of choice on my flights, I went ahead and got not one — but two — credit cards that offer Gogo vouchers as perks. My timing was lousy. Now that I have the vouchers, most of the planes I ride are switching to rival in-flight internet providers.

Gogo isn’t disappearing from the navigation map. Revenue rose 16% in its latest quarter, but…

Continue reading at THE MOTLEY FOOL


Leave a Reply

Your email address will not be published.