Sometimes it can be just as valuable for investors to know what stocks they should be avoiding, or even what shares they should be selling, as it is for them to think about those they should be buying. Here are three FTSE 100 stocks that I would avoid entering at the moment, and consider selling my shares if I owned any.
TUI Seeing news headlines for all the wrong reasons, the tourism service provider TUI (LSE: TUI) said in March that the grounding of Boeing’s 737 Max planes was going to hit its books hard – warning investors that if flights of the plane resumed by July, it would be taking a 17% hit to its full-year earnings, and if the planes were not back in the air by this point then its earnings will be taking at least a 26% hit.
Its latest quarterly report, meanwhile, showed customer numbers falling 7% for the quarter, while its small sales price increases are failing to keep up with inflation. More long term, the company saw growing revenue in both 2017 and 2018, but for the most part failed to translate this to significant increases in profits. Even though its shares are trading not far from their 52-week lows, I see further scope for them to move downwards.
Ocado (LON:OCDO) The online retailer Ocado (LSE: OCDO) has seen a challenging few months of late, not least of which when one of its main warehouses and distribution hubs literally went up in flames in February. The company confirmed this was due to a robot catching fire – part of its automated picking and packing facilities. Importantly, as well as setting its own online supermarket facilities back, the company is actually attempting to sell this automated technology to other grocers, notably Marks & Spencer; a robot fire is not likely to inspire confidence.
Meanwhile, Wm Morrison confirmed at the start of May that it would no longer be using Ocado as its exclusive digital partner, and that it will be handing back full use of Ocado’s automated warehouse facility until at least January 2021. Despite all this pressure, however, the company’s shares are still not that far from record highs, hinting that there may be some pullback for the stock in the near future.
Land Securities Group Land Securities (LSE: LAND), often know as Landsec, reported on 14 May that it has seen the value of its property portfolio fall by half a billion pounds in the past 12 months, suffering particularly from declines in retail property. Combined with a stagnating market in London, new regulations making buy-to-let less attractive, and the company’s own admittance that Brexit uncertainty is weighing on its finances, the bounce in its share price since the beginning of 2019 may have it edging towards the high side.
What’s more, earlier this month the company confirmed it was reversing its Brexit-driven ‘wait and see’ policy for new developments, and had plans to start three speculative office projects in London this year, potentially adding to its costs in the near future.
Karl has no position in any of the companies mentioned. The Motley Fool UK has recommended Landsec. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019