After a further market recovery last August, stock market experts reveal which stocks should be avoided in what is historically the weakest stock market month of the year – and where investments are now worthwhile.
- Experts present tops and flops for September
- The losers of the crisis are mainly represented in the travel industry
- Few retail companies are benefiting from the pandemic
August was largely a positive month for investors as the recovery has continued since US markets collapsed in March. Investors were optimistic despite the ongoing corona crisis and the still high unemployment figures. Nevertheless, cardano prognose US stocks should not be blindly accessed in the second half of September, which is traditionally weaker. Accordingly, US News’ Paulina Likos advised five stocks to watch with particular scrutiny, while her colleague John Divine recommended five stocks to invest in now.
Nordstrom share: sharp drop in sales due to corona measures
Like many other retail companies, the luxury department store chain Nordstrom is also suffering from the Corona crisis. The stock, which is listed on the NYSE, has already fallen by more than 60 percent this year. In the second quarter of 2020, the retailer saw its net sales fall 53 percent year-on-year to $1. 78 billion. Furthermore, the company’s expenses increased, which put an additional burden on the profit share. The decline in sales is mainly due to store closures as a result of corona-related containment measures. The retailer has also postponed its special anniversary sale. Likos suspected that the shopping event would have increased sales by ten percentage points.
Compared to competitors like Macy’sand Kohl’s, Nordstrom also suffered significantly higher losses. According to CEO Erik Nordstrom, the group focused primarily on building up liquidity in the first quarter, but now he wants to increase the company’s market share and profitable growth.
Host Hotels & Resorts share: Wave of cancellations leads to loss of revenue
The largest real estate investment trust for hotels in the us had to report a drop in revenue of 93 percent to 103 million US dollars in the second quarter. At the end of July had to hostReceived a total of 2. 7 million room cancellations for the year, representing $1 billion in lost revenue. Further cancellations are also expected in the second half of the year. The company continues to try to increase its capital position by suspending quarterly dividends and share buybacks, as well as cutting expenses. In the second quarter, however, the company already reduced its spending by 70 percent. Now Host wants to restructure its operating model in order to achieve higher profitability even with lower utilization, according to Managing Director James F. Risoleo in a press release at the end of July. Host stock is already down over 35 percent this year on the NYSE.
Ruth’s Hospitality Group stock: Losses despite focus on delivery and pickup
The restaurant operator Ruth’s Hospitality Groupclosed all of its U. S. locations Ruth’s Chris Steak House in April and shifted its business primarily to delivery and pickup services in the months that followed. These measures were also reflected in the sales figures: In the first quarter, the company’s revenues fell by 9. 4 percent to $108. 5 million, and then fell further to $28. 4 million in the second quarter. In 2019, sales gains of 110. 2 million US dollars were recorded in the same period. At the beginning of the year, the restaurant operator’s share cost $22 on the NASDAQ, fell to $4. 16 in March and has since settled at around $10. So far this year, the paper has lost almost 50 percent. Likos also expects share certificates to be volatile for the remainder of the year. In order to become more financially flexible, the company has paused all new restaurant plans, suspended dividend payments and reduced its spending to $1. 2 million per week, according to the quarterly report.
Hertz Global Holdings stock: Bankruptcy due to lost sales
Rental car provider Hertz lost $356 million in revenue in the first quarter of 2020, and global revenue plummeted 67 percent in the second quarter. Year-to-date, U. S. bookings have fallen 70 percent so far. The company then filed for bankruptcy in May due to the drop in revenue, future bookings and general willingness to travel. The company currently has $22. 4 billion in debt but only $1 billion in fixed assets. The predicament of the group is confirmed by its share price: the paper, which is listed on the NYSE, has already lost over 90 percent of its value this year.
American Airlines Stock: Decreased Passenger Volume
Also American Airlinesis struggling hard with the consequences of the Corona crisis. In response to the weak second quarter, CEO Doug Parker said it was the most challenging quarter in US history. During that period, the company lost $2. 1 billion in net profit and used $55 million in cash per day. Passenger traffic also fell below 2019 levels. In addition to increasing revenue, the airline now also wants to prioritize the safety of passengers and employees. An extended cleaning concept is used that even exceeds the guidelines of the Centers for Disease Control and Prevention, an agency of the US Department of Health. According to Likos, these measures are necessary, but would probably not affect the company’s share price. American Airlines stock, listed on the NASDAQ, has already collapsed nearly 55 percent this year.
Abbott Laboratories stock: Corona rapid tests drive stock price
The medical device manufacturer Abbott Laboratoriesbenefited from the fact that the us government recently approved the company for the use of its virus tests. Shortly thereafter, US federal agencies committed to purchase 150 million tests for a total of $750 million. According to market expert John Divine, Abbott’s tests could be the most effective way of curbing the spread of the corona virus, since a test result should be available after just 15 minutes and a test reliability of 97 percent is promised. At the beginning of October, the group is said to want to ramp up production to 50 million tests. With a free smartphone app that will be available soon, those tested will also be able to generate a digital badge that shows whether they tested negative and when. Investors appear to be similarly optimistic:
Lowe’s share: DIY stores benefit from the stay-at-home movement
Among retail companies, Lowe’s is one of the winners of the Corona crisis. Driven by the unusually strong housing market and the fact that people are spending more time at home during the pandemic, the DIY chain has been able to sell its products particularly well. Competitor Home Depot had a higher price-to-earnings ratio, but Lowe’s pays out a significantly smaller portion of its profits as dividends at 29 percent, so there is more scope for dividend increases here. Lowe’s shares are up more than 37 percent on the NYSE this year.
Dollar General stock: Basic amenities and convenient location drive gains
Another retail company that has posted profits so far during the crisis is the discount chain chain Dollar General. The retailer, which specializes in inexpensive everyday products, was able to increase its net sales by 24. 4 percent in the last quarter. Divine believes one possible reason is that consumers are turning to cheaper items during the pandemic to save money and ensure basic supplies. The favorable location in the neighborhood could also have persuaded some customers to shop at discounters. Thus, the group was able to increase its operating profit in the last quarter by 80. 5 percent to 1 billion US dollars, earnings per share reached an increase of 89. 1 percent to 3. 12 US dollars. Dollar General stock has climbed more than 30 percent on the NYSE this year. In 2019, the discounter also achieved growth in annual profit for the 30th time in a row.
Salesforce stock: new entry in the Dow Jones
The software developer Salesforce, whose application is intended to simplify customer relationship management and is now ubiquitous across all industries, has only recently been promoted to the Dow Jones. This year, the NYSE-listed share has already increased by more than 50 percent – Divine not only recommends the paper for September, but also for the coming decades. Of particular note is the company’s record-breaking price-to-earnings ratio of 103, as well as plenty of room for future earnings growth. Divine fully expects Salesforce’s net margins to increase and the developer’s profits to skyrocket.
Activision Blizzard share: video games in the corona crisis more in demand than ever
Video game developer Activision Blizzard is one of the most successful gaming companies in the stock market. The video game industry has benefited significantly from the Corona crisis as people have been spending more time at home and interacting with other video game fans through online games. Analysts expect that the development studio for popular titles such as Call of Duty, World of warcraft, Diablo and Candy Crush can increase its earnings per share by 24 percent over the next five years. The NASDAQ value has already increased by more than 30 percent this year. In the second quarter, the company had 125 million monthly active users. In the same quarter of the previous year, there were still 37 million users.