Category Archives: stocks to avoid

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From hype to bust – the story of 22nd Century Group

Likely, everyone will know a story that kicked a stock into hyposphere, only to fall into dust later. The respective companies either did not recover anymore or went entirely bust. They all share one commonality: a nice story that catches the interest of especially retail investors. But where there is excessive greed without the support of fundamentals, the fall from grace is just around the corner. Here’s an example that was set to disrupt an undisruptable industry: tobacco.

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Not all that glitters is gold – a critical look at Barrick Gold

Everyone who engages with gold mining companies, very early stumbles upon Barrick Gold. It’s a household name and a darling of many. Even though the company describes itself as “world class”, the performance of the underlying business has been terrible – no understatement. There are so many myths about gold, silver and miners that I want to clean up with another such. It is not always the go-to strategy to just pick a household name, assuming size is all that matters.

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Why I am skeptical about the “safe copper bet”

Who hasn’t heard of it, yet? The price of copper, together with the respective miners, can only see one way: up, up and upper! This thesis is based on the ongoing electrification of our society. Where there is electricity, copper is needed. More electricity demand = more copper demand, right? What sounds plausible, has some weak points to it. Actually, I am even skeptical that this will play out in the way that the majority thinks, at the very least in the short to medium term.

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Unibail-Rodamco-Westfield – A steel at 0.3x property value?

Who does not dream of owning at least part of a city’s most valuable properties? And what about several prime locations? Unibail-Rodamco-Westfield is Europe’s biggest owner of mainly shopping malls, but also offices, in many metropolitan areas with high foot traffic. The stock is currently valued at a third of its “net reinstatement value”, i.e. its replacement or asset value as an investor would call it. 33% is less than Buffett’s famous “dollar for 50 cents” – is URW a buy?

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The dice are cast – 3M will have to cut its dividend

My long-time readers know that I have pointed my shotgun at candidates with likely coming dividend cuts. I even made two Weeklies out of this topic, as I am still convinced that dividend cuts will be one of the mega trends of this decade, and a fairly underestimated one! There are several companies where I am seeing massive operating and financial issues. In this latest episode, I am targeting again the famous industrial conglomerate and inventor of post-it stickers, 3M.

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Turnaround-bet: Is Vodafone’s 10% dividend yield a no-brainer?

The British red telecom giant announced not only a CEO-change, but also a strategic shift (both often come as one). Meanwhile, the share price is advancing its year-long decline, reaching even a fresh quarter-century low (!), as investors seem totally unimpressed. In the past, Vodafone has been a reliable dividend payer, although the payout was cut in 2019 and not raised again since then. The 10.7% yield seems tempting. Can it get worse or is it worth a shot?

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Earnings quality the worst in three decades – look at free cash flow!

Operating or net income, adjusted operating or net income, earnings per share (EPS), adjusted EPS and the price to earnings (PE) ratio are commonly used to assess a company’s business results and to value it. They are also often used as headline numbers and proof of performance by the companies themselves. However, there is a rising trend of decreasing “earnings quality” – an indicator that neither the economy is doing pretty well, nor many companies.

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What you should know about the SVB collapse – my premium members were warned

As I am publishing this Weekly, already a week has passed after the collapse of not just one bank dealing with startups – that was the 16th largest bank in the US – but indeed three banks. After emotions calmed down a bit, we can have a look at what went wrong and what you should be aware of. My Premium Members already knew about the risks “hidden” on the balance sheets of banks, as I’ve closed an investment case on a profit a month ago due to these risks. And no, this is not a buy-the-dip occasion!

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A king is falling – why Altria’s butt is burnt down

Altria is a stock from the illustrious circle of the “dividend kings”. It is even so special that it has actually raised its dividend more than once a year over the past half century – 57 increases over 53 consecutive years. However, the last few years have been disappointing in operational terms. Recent results, in particular, have shown the direction this company is likely to take. There are still a few puffs left, but don’t be surprised by the impending dividend cut at this darling of many dividend investors.

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Beware the next hype – Helium Producers

In recent months, I’ve been reading more and more about a hot new topic: helium production. Helium is an essential gas in medical as well as industrial applications. The key message being spread is that this so far opaque market is about to become more transparent, as many small exploration companies seem to be embarking on promising projects. Is this really the next sector you should bet on, or is it too much hot air that will deflate, bringing headaches like too much inhaled helium?

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