Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Scary Stocks Investors Should Shun in 2015

Companies / Investing 2015 Dec 12, 2014 - 03:22 PM GMT

By: Money_Morning


Michael A. Robinson writes: Earlier this week, I predicted a strong year for technology stocks in 2015.

But that doesn’t mean every tech stock is going to be a winner in the New Year.

While I usually share those winners with you in this space, a big part of making money over the long haul is avoiding losers whenever possible.

With that in mind, let’s take a look at 2015′s three worst tech stocks.

Tread carefully, though – their numbers may terrify you…

Here Come the Losers

If you’ve followed along with me even briefly, you know I’m optimistic about high tech and the life sciences – and the broader stock market itself, for that matter.

Indeed, the last five years have been great for investors across the board. The bellwether Standard & Poor’s 500 Index is up more than 150% since the bull market began back in April 2009.

But now that we’re hitting new highs, it pays to become even more selective in your investment choices.

I still strongly believe that tech will outperform the broader market next year. But there will be losers along the way, of course. And losing money on even a couple of stocks can really depress your overall profits.

Not surprisingly, the three stocks I want you to avoid violate Rule No. 4 of my five-part Tech Wealth Secrets system, which says to “focus on growth.”

After all, stock prices tend to follow increases – or decreases – in earnings. All three of the stocks I want you to avoid have weak earnings growth.

Let’s take a look

Most Terrifying Tech Stocks of 2015 No. 1: SunPower Corp.

For 2015, SunPower Corp. (Nasdaq: SPWR) faces three big obstacles that make it a poor stock. Two are macro in nature, and one is company specific.

First, the GOP will control both houses of Congress next year. I doubt that Republicans will repeal federal solar tax credits, but they may not renew this incentive when it expires in 2016.

Second, the energy sector is in turmoil as oil prices continue to fall. Oil is down more than 30% since last summer and looks to remain at depressed prices through at least the first half of next year.

That’s an issue that confronts the entire solar industry. The problem is simple. Many investors are going to be reluctant to buy solar stocks when oil is so cheap, undermining support for SunPower.

And third, SunPower recently lowered guidance on sales and earnings for 2015. Bear in mind, this was roughly two weeks before OPEC said it would maintain current production, prompting another round of energy price cuts.

That follows a weak third quarter in which SunPower increased sales by a scant 1.6% and saw earnings per share fall nearly 73% to 20 cents.

SunPower does have one thing going for it. The company is considering spinning off what’s known as a “YieldCo,” a dividend-paying stock based on solar-power assets.

However, given the weak nature of solar in a low-cost energy environment, the odds are good that SunPower puts that off until at least 2016.

Most Terrifying Tech Stocks of 2015 No. 2: Samsung Electronics Co. Ltd.

Sometimes a single number speaks volumes about a troubled tech giant.

And in the case of Samsung Electronics Co. Ltd. (OTC: SSNLF) that number is 56 – the number of smartphone models the company now has on the market. Samsung recently said it would cut back models by 30% to roughly 40, but that’s still way too many to get true synergies.

No doubt, according to data compiled by IDC, Samsung still ranks as the leading global smartphone brand by shipments, with 25% of the market.

However, maintaining that lead is costing a fortune. Samsung’s net profits fell a whopping 49% in the most recent quarter. At 7%, smartphone margins are the lowest they’ve been since 2009.

And the company’s mobile division is in disarray. Just last week, dozens of mobile managers – the exact number isn’t yet known – were relieved of their posts.

Even if the company wasn’t reeling right now, I still think you should avoid it.

Here’s why.

Plenty of foreign firms trade in the United States over the counter, as Samsung does. But most of those companies have plenty of volume and are easy to buy and sell.

Not so with Samsung. You not only have a high price, at $1,100 a share, but the stock is very thinly traded. That means you might not be able to get out in a pinch.

Most Terrifying Tech Stocks of 2015 No. 3: Groupon Inc.

Though it’s down nearly 40% so far this year, Groupon Inc. (Nasdaq: GRPN) is starting to get buzz for its low price of $7.25 and as a possible “turnaround stock.”

Moreover, the e-commerce leader in group discounts had a strong weekend between Black Friday and Cyber Monday, when sales rose 25% from the year ago-period.

But I still don’t believe Groupon has a unique enough value proposition. Or as Warren Buffett might say, it has no real “moat.”

As a pretty active online shopper, I’m inundated daily with coupons and special promotions. And as savvy online shopper, I just can’t tell the value distinction between Groupon’s deals and those from its competitors or from retailers themselves.

That’s why I’m still not impressed with Groupon’s recent performance, even though it did beat both sales and earnings estimates in the third quarter.

Sounds encouraging, until you realize Groupon has a return on equity of a negative 20%. Even worse, over the past three years, it has an earnings-per-share growth rate of negative 12%.

And remember, we often use the price/earnings to growth (PEG) ratio to look for true bargains, not just “cheap stocks.” A PEG of 1 indicates “fair value.” Anything higher means we’re paying a premium.

Groupon has a PEG of 4.94.

So, while Groupon’s recent buzz may make it sound attractive, I’d stay away at least until we know it can do well for shareholders beyond a couple of strong quarters.

All of which brings me back to Rule No. 4. Here at Strategic Tech Initiative, we focus on companies with solid earnings growth, because their stocks give us the highest returns over the long haul.

The three stocks we’ve talked about today all face big questions about their long-term earnings.

But don’t be discouraged.

In the year ahead, I’ll be bringing you dozens of investment ideas that offer superior returns.

And together we’ll continue our journey on the road to financial freedom with the greatest wealth engine the world has ever known — technology.

Source :

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules