4 stocks to avoid in 2013
It doesn't look like a happy new year for these picks.
By Michael Nolan
Some companies have very promising outlooks for 2013. These are not those companies. In this article, I am going to be focusing on stocks to avoid in the new year, starting with a pharmaceutical failure.
Synageva BioPharma (GEVA)
Synageva actually has a rather promising drug in the making, called SBC-102. The mystery drug targets lysosomal acid lipase deficiency, and could be a success in the future. However, it is only in phase I/II of its clinical trial process: very early on and far from being on the counters at your local pharmacy.
Synageva has strategically focused on unmet medical needs so as to beat competitors, yet it doesn’t look as though 2013 will be particularly great for this pharma company, because, at a value of $1.15 billion and with only one drug in clinical trials, it seems as though Synageva has lots of eggs in one basket. Plus, it could be a while before we hear from it again about its "promising drug." It could even be more than years until we see this drug hit the shelves. It’s a shame for a company that did so well in 2012. However, stay away from Synageva this year.
Vector Group (VGR)
How could I steer clear of a 10.2% dividend yield? Crazy, right? Well, as is often the case, many of the highest dividend stocks are ones to seriously avoid. In case you’ve never heard of them, which you probably haven’t, Vector Group produces over 118 variations of cigarettes through different brand names.
Seems good so far. So, why avoid them? Well, everything hasn’t exactly been picture perfect for Vector in 2012, as they saw revenue drop 4% and earnings drop a staggering 79%. What’s worse is that it could have been much worse had the company not raised the prices on one of its brands. So, as is my advice with lots of cigarette brands, stay away for 2013.
United Online (UNTD)
Another high dividend stock (a 7.3% yield in this case) that I’m telling you to avoid. United Online's revenue was also down 4% this year, and earnings per share sunk 36%. There is very little reason to have hope in this company. Look at their divisions and see what you recognize:
United Online has three divisions: Internet service companies NetZero and Juno; Social Networking cites like Classmates, StayFriends, and Memory Lane; and a company called FTD floral network. How many of these have you heard of? Yeah, neither have I. I vaguely recall seeing NetZero ads on TV about 10 years ago, but that is about the extent of my memory on any of these brands.
Pitney Bowes (PBI)
Finally, keeping with the trend of high dividend stocks, I recommend you avoid the 13.5% yielding Pitney Bowes. The company dragged down 41% in 2012, and I doubt that a turnaround is in store for the metered-mail provider.
Unfortunately, businesses are just not mailing as much or as often as they use to, and it probably won’t change any time soon. It’s reflecting in Pitney Bowes’ stock, too. It earned $2.35 a share last year, and it looks like it will boast just $1.99 a share this year. They did bring in an executive from IBM (IBM) to head the company; however, no matter who runs the company, it is a dying market for Pitney Bowes.
The foolish bottom line
Regardless of yield or past results, look for these stocks to take a nose dive in 2013. There are just too many problems for these companies to overcome in the upcoming year, and as a result, they are poised to disappoint. Steer clear of these stocks for 2013.
Mr. Motley... you fool... Pitney Bowes? You mean the owner of the software used by E-Bay & Amazon sellers for their electronic shipping? Collectively... this process accounts for more business than what big brand boxes do. With so many traditional retailers failing and closing the year- 2013, it seems that our immediate alternative would be even more online shopping and thus, electronic shipping. Unless a better competitor or competing process pops up out of nowhere, this stock isn't leaving anytime soon.
A recommendation-- the world has already shifted in many ways- traditional thinking about what is and what isn't a stalwart is dangerous. There's a major rift between those with the money and those who buy stuff that make economy. It only makes sense to say-- fools and their money are quickly parted. A forecast that will ring loudly in 2013.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.