There is a lot of uncertainty for the near term, which has investors worried about what stocks to dump and where to look next.
The pandemic has continued to constrain various industries, slowly deteriorating previously strong businesses.
As many investors may be taking the time to review their portfolios, it’s worth reassessing your investments in the following companies that have had less-than-stellar performances this year:
— Haynes International (ticker: HAYN)
— Tailored Brands (TLRD)
— Ashford (AINC)
— United Airlines Holdings (UAL)
— MGM Resorts International (MGM)
Haynes International (HAYN)
Haynes International, a manufacturer of nickel- and cobalt-based alloys used for high-temperature corrosion applications, supports many industries like aerospace, power generation and chemical processing technologies, among others, but appears to be highly leveraged.
Headquartered in Kokomo, Indiana, HAYN holds total liabilities of $297 million, which is larger than its market cap of $246 million. Also, its total debt-to-equity ratio is greater than 1 at 2.75, which indicates it is financing its company’s operations through debt.
“Each of our markets were impacted,” Michael Shor, president and CEO of Haynes, said in a news release.
The manufacturer reported a third-quarter net loss of $8.1 million compared with a net income of $3.8 million for the same period last year.
“Gross margins in the quarter were significantly compressed due to unfavorable fixed-cost absorption caused by the low volumes produced in our facilities, charges to implement costs reductions and higher reserves needed for inventory,” Shor said in the July 30 news release.
The stock appears overvalued, with its price-earnings ratio of 47 higher than that of its competitors like Allegheny Technologies Inc. ( ATI) and Mueller Water Products ( MWA), which have P/Es at 15 or lower, and more than the metals and mining industry P/E of about 37.
Tailored Brands (TLRD)
Tailored Brands, a U.S. retail company, has filed for bankruptcy protection. Like many other struggling retailers, the company took measures to deal with the consequences of store shutdowns due to the global health crisis.
In late July, it reduced 20% of its workforce and identified 500 stores for potential closures. TLRD finally restructured its debt to strengthen its cash position in early August.
“The unprecedented impact of COVID-19 requires us to further adapt and evolve,” Dinesh Lathi, president and CEO of Tailored Brands, said in a news release.
Tailored Brands is the parent company of Men’s Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G Fashion Superstore, which will continue to operate but in a limited capacity.
Ashford, an investment management firm providing advisory services in hospitality, also invests in companies that provide services to the industry.
The Dallas-based firm also has a real estate investment trust , known as a REIT, called the Ashford Hospitality Trust that consists of more than 100 full-service and select-service hotels, like Courtyard Marriott, Embassy Suites Hotels and Hampton Inn by Hilton.
Hospitality has been among the worst-hit industries from the pandemic, a blow to the company’s fundamentals.
The company reported a net loss of $16.7 billion, or a stockholder loss of $7.37 per share in the second quarter of 2020, according to an earnings release on July 30.
The firm’s current stock price is around $6, a significant drop from the same time last year, when AINC traded for close to $29.
Ashford owns about a 48% stake in OpenKey, an app that provides keyless entry into hotel rooms. There may be growth in this area as digitization services are appealing in a tech-driven economy. But with the health crisis expected to continue and make a lasting impact on the hospitality industry, the outlook for Ashford’s growth is grim.
United Airlines Holdings (UAL)
United Airlines has experienced its most difficult financial quarter in its 94-year history. Total operating revenues are down 87.1% year over year, according to the airline’s second-quarter financial earnings release.
United was among multiple airline recipients of the $25 billion stimulus package, and considering UAL’s daily cash burn in the second quarter has been $40 million to fund its daily operations up until the end of the quarter, it may dip into the aid package if the company decides to prepare for additional furloughs in the fall.
The airline has taken dramatic steps to manage the impact of the pandemic. More recently, it has been able to reduce its daily cash expenses to $25 million per day and is expected to improve its liquidity position.
Consumers have high caution, low demand and remain wary of airline transportation. This is reflected in UAL’s current stock price of around $32, down 63% year to date. The future of the travel industry is set to evolve, leaving many unknowns for United.
MGM Resorts International (MGM)
If you haven’t already, investors should consider dropping MGM. It’s been on the stocks-to-sell list for the past several months, and there is little sign of swift recovery.
The global health crisis has erased 91% of the company’s net year-over-year revenues due to several shutdowns, operations restrictions in all locations and travel restraints that impact Macao properties.
MGM’s consolidated operating loss was $1 billion, a stark contrast to its consolidated operating income of $371 million last year during the same quarter, according to its July 30 news release.
MGM’s share price has been cut in half since the beginning of the year, from about $33 on Jan. 2 to $16 on Aug. 4.
The business can sustain the consequences in the long term, however, in the short term, “the operating environment will remain challenging and unpredictable,” Bill Hornbuckle, who took over as CEO and president of MGM Resorts on July 29, said in a statement.
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