The former retail giant while posting impressive sales this last quarter totaling $189 million, up from a $3.89 billion loss the previous year, just doesn’t cut it. The impressive profit totaled from a sale of previously owned assets and the sale of store locations. While impressive, the numbers don’t lead to a clear viable business strategy to overtake or maintain existing market share. Recently, the company has announced plans to sell off more assets in the hope of gaining higher revenues. Recently, the international Council of Shopping Centers, cut it’s monthly outlook for American stores forecast from 3 percent to 2 percent, the reason, weakened consumer confidence. The company’s stock closed at $51 a share up 1.48 points. With a weak economy and a poor retail clothing outlook, this one is out, Sell.
Unlike Sears (SHLD) who sold stores, Gap (GPS) managed to promote it’s business model and sell clothes. The company reported in the previous quarter $233 million in profit which was flat from the previous year. The clothing company saw sales increase in the US by 2 percent, to $755 million. Working to build new brands including the Mad Men line of clothing, along with warm weather contributing to increased sales, the company has not managed to increase margins. The company has consistently had poor execution and consistently relied on discounted sales to improve their outcome. Gap stock closed at $26.73 up .31 points from last Friday. Despite the increase in sales of bottoms (pants), the company has opened itself to oversold investors and risk, sell.
If you prefer to avoid volatile investments with high risk, Zynga (ZNGA) sure fits the profile. After rough trading prompted by the IPO of Facebook, the company’s stock price took a dive from $8.27 a share to it’s current price $5.73, losing nearly 30 percent of it’s value. Another blow came when Cowen & CO published a grim outlook anticipating a ‘tailspin’ decline, in the online social gaming industry. While one can maintain optimism that Zynga’s business model opens itself to periodic fluctuations, major entities must diversify revenue streams to develop quality products and maintain new software development, sell.
First Solar (FSLR)
As US subsidies for solar energy begin to be discontinued solar energy providers are going to find it harder to develop and maintain their bottom lines. Despite short term growth (up .91 as of today’s writing), many solar companies have seen profit margins erode in part due to reduced costs from competing Chinese manufacturers. Many companies that also deal in solar energy may find financing or credit difficult to secure as a result of uncertain credit markets in Europe, the S&P currently has the company at 2 stars, sell.
Despite the renewed optimism of a sleek Microsoft (NASDAQ:MSFT) based partnership, the troubled phone maker has been dealt another serious blow by credit rating agencies. Moody’s on Friday downgraded the company’s rating to ‘junk’ status, affecting the company’s $3.6 billion in debt holdings. Nokia’s (NOK) smartphone shipments fell 51 percent in the first quarter while regular phones dropped 16 percent as the company fails to stave off competition from rivals Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG). The company has already made announcements that it plans to cut 10,000 employees, including the axing of research and development projects. The company’s stock as of today’s reporting is at $2.52 a share up .04 points from yesterday’s closing bell, down from it’s 12 month high of $7.31 a share or down 65 percent. Despite the positive inclinations of certain analysts I don’t see this stock performing well or the company securing enough financing to maintain operations. With little developments in exciting consumers about Windows handsets and sales dropping, with earnings predicted to be short on expectations there is no way I can recommend this stock, sell.