This is the second part of SmarterSpend.com series on managing your stock market funds.
In the first part of my series, I highlighted the best performing stocks in the 2008 year, including the dismal third quarter, and analyzed the significance of the recession on stock performance in the upcoming fiscal year. I will use the same approach to identify 25 key stocks that every investor should avoid in 2009. The key to finding successful stocks in a recession this deep is identifying the effects of the lack of money supply to consumers, businesses, and corporations.
With that in mind, here are 10 stocks I predict will have a dismal 2009.
1) Macy’s (NYSE: M)
In my opinion, Macy’s is going to be the next department store chain to file for bankruptcy. Why? First of all, people are flocking to cheaper (discount) stores like Ross. Second, the quality of Macy’s clothing has been progressively getting worse and worse. I remember 5 years ago, Macy’s was a respected chain to buy clothing, but now, its clothing is beginning to resemble Target. Lastly, the closing of 10 stores was a sure sign of impending doom.
2) Capital One (NYSE: COF)
Many economists are predicting that the next lending industry to collapse is the Credit Card industry, as more people begin to default on smaller loans. Unemployment rate increases will lead turmoil in the credit industry with Capital One leading the way.
3) New York Times (NYSE: NYT)
In the midst of laying off experienced columnists and mortgaging out their office, New York Time’s outdated business model is in the midst of collapse. The fact that people just don’t read newspapers anymore doesn’t help either.
4) Citigroup (NYSE: C)
Citigroup has almost $2 trillion in Level 2 or 3 assets and has repeatedly needed bailout money to keep its liquidity. With stocks hovering around the 2 dollar range and more write-downs hovering around every quarter, Citigroup is poised for federal intervention in the style of AIG.
5) Boeing (NYSE: BA)
Shares have already fallen 50% and will continue to fall as demand for new airplanes comes to a screeching halt. Less money in the economy means less people flying and less money for the airline industry to buy new planes.
6) Sears Holding Corporation (NYSE: SHLD)
At 35.66 dollars a share, Sear’s stocks are very overpriced. Consumer interest in Sears has been dwindling as they seem to be unable to keep up in every department: clothing, electronic, etc. I expect Sears stocks to drop to about $12 by the end of the year and hold steady around that range
7) Toyota Motor Corporation (NYSE: TM)
Everyone knows that they should avoid GM and Ford, but doesn’t anyone think that 62.40 for a share of Toyota in the current economic state is too high? Toyota just cut its production to its lowest rates since 1987.
8 ) Whole Foods Market, Inc (NYSE: WFMI)
Organic food is a luxury of affluence. With people barely able to pay their utility bills, families are cutting back on grocery expenses- meaning that ovepriced organic food will take a major hit this year. Current stocks are around 12.21 a share, expect WFMI to drop to about 6.50 before the end of September.
9) GAP (NYSE: GPS)
Not only are they facing fierce competition, but their clothing is overpriced and not very marketable. If GAP wants to survive in 2009, they have to come out with appealing clothing that is going to sell. The days of the GAP Sweaters are over.
10) Sirius Satellite Radio (NYSE: SIRI)
One of the most unnecessary products in a battered economy, Sirius enjoyed a period of media coverage a few years back. Shares are now worthless at 13 cents and there is no hope as more and more people trim extra costs.
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