Even in bull markets, there are some companies that struggle to survive. New technologies, new ways of bringing products to market, or changing demographics are just a few reasons why some once strong, even iconic, companies can go bankrupt. But as an investor, you have to know when to cut your losses with stocks that are destined for disaster, and one of the best ways to avoid that disaster is to avoid those stocks in the first place.
In this slideshow, we'll review nine stocks that could very easily go bankrupt in 2019 … if they don’t go bankrupt before then. And here’s some news for investors, they’re not all in retail, although that sector is adequately represented.
Quick Links
- Sears Holdings
- Abercrombie & Fitch
- GoPro Inc.
- Container Store Group Inc.
- Immunomedics, Inc.
- FitBit Inc.
- Sturm Ruger & Company Inc
- Barnes & Nobles
- Office Depot
#1 - Sears Holdings (NYSE:SHLD)
Sears Holdings (NYSE: SHLD) - The saying “death by a thousand cuts” seems to apply to Sears. This iconic brand, say some analysts, could have been Amazon before Amazon. Instead, it’s finding itself on the verge of bankruptcy, and not just because of Amazon. The retailer has faced self-inflicted wounds that is a cause of annual revenues that have fallen every year since 2007. In fact, Sears hasn’t reported a full-year profit since 2011. Same-store sales have fallen every year since 2012. But let's cut to the chase, the real problem with Sears is the same reason they're still in business, their CEO, Eddie Lampert. Through his hedge fund, ESL Investments, Lampert continues to prop up the company, but not out of altruism. If the company declares bankruptcy, his hedge fund which now owns almost 50% of Sears’ secured debt will be at the front of the line to collect. This surely means that the endgame for Sears is being orchestrated more by a creditor than a CEO. How else to explain that it has sold off revenue-bearing units that have cut off any path to profitability. The company is also not being helped by its ongoing feud with its iconic Craftsman brand. Sears also cut their long-standing ties with Whirlpool Corporation which is a significant blow to their home appliance division. None of these moves suggest a company that is looking to recover.
About
- Current Price
- 0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#2 - Abercrombie & Fitch (NYSE:ANF)
Abercrombie & Fitch (NYSE: ANF) - A&F is trying to beat the clock, but reality may be working against them. They reported solid fourth-quarter sales as part of the fourth quarter that saw a robust 5% gain in year-over-year, same-store sales. But is that growth sustainable? Analysts are not convinced, and more importantly, consumers may not be either. The problem for A&F, which also owns the brand name Hollister, is that they are trying to achieve growth while shrinking their retail footprint. As a store that has always relied on teens in malls, the idea that they will have a net loss of about 50 stores nationwide makes it hard to see this as a sustainable strategy. Although a survey suggested that teens and young adults are looking to spend more on consumer goods this holiday season, it's unclear if that will translate to another strong holiday season. If it does, A&F may be able to play for more time, but with a stock that is currently trading at about 30% off highs reached just a couple months ago, there seems to be no real momentum for traders.
About Abercrombie & Fitch
Abercrombie & Fitch Co, through its subsidiaries, operates as an omnichannel retailer in the United States, Europe, the Middle East, Asia, the Asia-Pacific, Canada, and internationally. The company offers an assortment of apparel, personal care products, and accessories for men, women, and kids under the Abercrombie & Fitch, abercrombie kids, Hollister, and Gilly Hicks brands.
Read More - Current Price
- $136.81
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $177.43 (29.7% Upside)
#3 - GoPro Inc. (NASDAQ:GPRO)
GoPro Inc. (NASDAQ: GPRO) - The story of GoPro is somewhat simple. They created a pretty cool product…that doesn’t translate to a mass market. At least not in any meaningful way. The maker of video-action cameras is enduring its third straight year of declining revenue with top-line revenues this year down 38%. However, it has seen its stock rise recently. But what has come up can just as quickly go down, and down may be where the stock is headed if the launch of its new Hero 7 product line does not meet expectations. This is where GoPro has had issues before. So what’s the problem? In a word, smartphones. When potential customers already have devices with the ability to do many of the same things as a GoPro, it’s hard to manufacture the need. Serious video enthusiasts will appreciate the picture quality you can get from a GoPro, and its Hero 7 line will offer live streaming, something that earlier offerings did not. However, the devices will still require a separate iOS or Android companion to live stream, limiting its utility somewhat. The words of a CEO can be telling and GoPro’s CEO Nick Woodman has said the company is open to selling or partnering with another company. So far, there have been no takers.
About GoPro
GoPro, Inc develops and sells cameras, mountable and wearable accessories, and subscription services and software in the Americas, Europe, the Middle East, Africa, the Asia and Pacific region, and internationally. The company provides cloud connected HERO12 Black, HERO11 Black, HERO11 Black Mini, HERO10 Black, HERO10 Black Bones, and HERO9 Black waterproof cameras; MAX, a 360-degree waterproof camera; Premium and Premium+ subscription services, which include full access to the Quik app, cloud storage supporting source video and photo quality, camera replacement, and damage protection; Quik subscription that offers access to editing tools, which allows users to edit photos, videos, and create cinematic stories; and Quik desktop and mobile apps that enable users to get their favorite photos and videos with footage from any phone or camera.
Read More - Current Price
- $1.13
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $2.25 (99.1% Upside)
#4 - Container Store Group Inc. (NYSE:TCS)
Container Store Group Inc. (NYSE: TCS) - It’s ironic when a business that specializes in providing options for customers to store their excess attempts to shrink its way to success. But that seems to be the plan for the Container Store Group Inc. With layoffs and restructuring plans announced, the company hopes to continue its positive second-quarter earnings report that beat analysts' expectations. However, the company is already facing a strong challenge from less expensive online options and competition from large box stores such as Home Depot (suggesting organization has gone mainstream) and specialty home furnishers such as Bed, Bath & Beyond (hitting the company on its design flank). The company still has 80 operating stores in the United States and did post an increase in sales in their most recent earnings report. However, same-store sales remained weak (down 0.2%). The model for the company is not a sustainable one in a brick-and-mortar environment. After all, once items are stored, the need for the product goes away.
About The Container Store Group
The Container Store Group, Inc operates as a specialty retailer of organizing solutions, custom spaces, and in-home organizing services in the United States. The company operates in two segments, The Container Store and Elfa. Its stores provide custom space offerings; countertop, cosmetic and jewelry, shower and bathtub, drawer organizers, and cabinet storage products; closets that includes shoe storage, hangers, drawer organizers, boxes and bins, hanging storage bags, garment racks, jewelry storage, and bedding.
Read More - Current Price
- $4.29
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1.00 (76.7% Downside)
#5 - Immunomedics, Inc. (NASDAQ:IMMU)
Immunomedics, Inc. (NASDAQ: IMMU) - It’s never a good sign when a company has to “rob from Peter to pay Paul”, but that’s the situation facing Immunomedics. If you don’t look too closely, things might look pretty good. Sales of LeukoScan, their oncology diagnostics product, are robust. And it has another product, Sacituzumab Govitecan, considered its flagship product in Phase 2 trials. The company is also pushing forward with a product currently in Phase 3 testing called Epratuzumab. All of this sounds great until you look at how the company is funding its future projects. They have already announced plans to sell the rights its LeukoScan franchise because they need cash to fund the other projects in their pipeline. They have also sold the royalty rights to Sacituzumab Govitecan to Royalty Pharma. All of this is signaling what the company already knows, they are burning cash, and are headed for bankruptcy or some sort of partnership.
About Immunomedics
Immunomedics, Inc, a clinical-stage biopharmaceutical company, develops monoclonal antibody-based products for the targeted treatment of cancer. It develops sacituzumab govitecan, an antibody-drug conjugate for the treatment of patients with metastatic triple-negative breast cancer. The company focuses on commercializing sacituzumab govitecan as a third-line therapy for patients with metastatic triple-negative breast cancer in the United States.
Read More - Current Price
- $87.86
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - FitBit Inc. (NYSE:FIT)
FitBit Inc. (NYSE: FIT) - Along the lines of GoPro, FitBit created a product with technology that was, in some cases, already available, too easy to copy in other cases. Either way, the product was not as marketable as once thought, and it didn’t help matters that Apple’s iWatch became far more marketable than the company thought. Largely because while Apple was not first to market, they quickly became the recognized name. FitBit’s brand name should carry on well into 2019, but analysts don’t foresee the market for FitBit’s consumer electronics hardware wearables to increase and the company doesn’t have any plans to expand on its product line which leaves the only other path to growth a drastic cutting of expenses that would bring the company more in line with its anticipated size. The company reported a 15% decline in second-quarter sales and a negative free cash flow of $83 million. To make matters worse, the company is forecasting a 3% year-over-year revenue decline for Q3 with a negative free cash flow of $30 million and net income per share within a range of -$0.02 and $0.01.
About Fitbit
Fitbit, Inc, a technology company, provides health solutions in the United States and internationally. The company offers a line of devices, including Fitbit Charge 3, Fitbit Inspire, Fitbit Inspire HR, and Fitbit Ace 2 activity trackers; Fitbit Ionic and Fitbit Versa family of smartwatches, as well as Fitbit Flyer wireless headphones and the Fitbit Aria family of connected scales; and accessories, such as bands and frames for its devices.
Read More - Current Price
- $6.93
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - Sturm Ruger & Company Inc (NYSE:RGR)
Sturm Ruger & Company Inc. (NYSE: RGR) - Simply put, the firearm industry is under fire. Remington has already filed for bankruptcy and sales for Smith & Wesson parent company, American Outdoor Brands Corp. are in decline. What this means for Sturm Ruger is unclear. The company had an anti-gun activist speak at one of their shareholder events. And the company is publicly supporting measures initiated by their shareholders to monitor violent events in which their product are used, demonstrate that they are attempting to manufacture safer firearms (there is some talk of “smart guns”) and finally to provide shareholders with a risk assessment based on U.S. gun violence. The stock was undervalued early in the year and has surged, but the industry faces headwinds, including stricter gun laws that are almost inevitable. A catalyst of the Remington bankruptcy was having their products attached to the weapons used in the Sandy Hook violence. That presents an existential risk to Sturm Ruger.
About Sturm, Ruger & Company, Inc.
Sturm, Ruger & Company, Inc, together with its subsidiaries, designs, manufactures, and sells firearms under the Ruger name and trademark in the United States. The company operates through two segments: Firearms and Castings. It provides single-shot, autoloading, bolt-action, and modern sporting rifles; rimfire and centerfire autoloading pistols; single-action and double-action revolvers; and firearms accessories and replacement parts, as well as manufactures lever-action rifles under the Marlin name and trademark.
Read More - Current Price
- $37.36
- Consensus Rating
- Strong Buy
- Ratings Breakdown
- 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#8 - Barnes & Nobles (NYSE:BKS)
Barnes & Nobles (NYSE: BKS) - It’s not that people aren’t reading books. They’re just not as keen on buying them anymore. And when your business model is based on selling real books in a brick-and-mortar environment, things can look rather bleak. That is the situation confronting Barnes & Nobles. Whereas the company once was a bookseller, they now tend to play the role of a hangout space where students can meet to do homework and have coffee. As evidence that the math is not working out, in the second quarter of 2018, the bookstore chainsaw overall sales dip by nearly 8%. Year-over-year, their loss increased from $20.4 million to $30.1 million. Simply put, they are burning cash at an unsustainable base and there is no real path to profitability. The digital book space is already saturated. And although Barnes & Nobles has no business that threatens its market share, if the company can’t turn a profit during a bull market, what are its prospects should the economy experience a downturn. The stock is trading around $6.50 per share which is up from its 52-week low, but the bounce is largely due to speculation that the company is open to takeover offers.
About Barnes & Noble
Barnes & Noble, Inc primarily operates as a bookseller in the United States. The company operates through two segments, B&N Retail and NOOK. It sells trade books, including hardcover and paperback titles; mass market paperbacks, such as mystery, romance, science fiction, and other fiction; and children's books, eBooks and other digital content, NOOK and related accessories, bargain books, magazines, gifts, café products and services, educational toys and games, and music and movies.
Read More - Current Price
- $6.49
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#9 - Office Depot (NYSE:ODP)
Office Depot (NYSE: ODP) - It’s easy to look at Office Depot as just another casualty of Amazon. After all, the e-commerce giant put the entire industry on notice when it started to sell office supplies online in 2012. But the truth is while we may love The Office, we live in a world where we don’t need to actually look at many of the products that Office Depot sells, including paper. So there is little need to have the stores. And without the stores, their business model becomes a commodity based on price and convenience. Only 1,400 Office Depot and sister stores exist down from 2,600 just five years ago. The stock has recently received a little bump from surprisingly positive second-quarter earnings led by increased sales in its service segment (i.e. the industry’s push to become your home office). This may have some legs if the trend towards a more mobile workforce continues, but without the core business of selling office supplies, this is a model that seems hard to sustain.
About
- Current Price
- 0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
If you think back to when you were a child, you can probably think of many brands that are no longer around. Technology continues to change the landscape of how we purchase things which is a particular challenge in the retail community, but it also has an opposite effect with other manufacturers who find that even some really innovative products can be easily copied or have limited application on a mass scale. And in some cases, companies have their moment in the sun but realize far too late when that fleeting moment has passed. Take our guidance for what it's worth and use your own analysis to form a final opinion. But these companies, for different reasons, will face pressure to remain out of bankruptcy in 2019.
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