5 STOCKS TO AVOID DURING THE CORONAVIRUS
It's been a very strange year for us all and the current virus pandemic has changed life as we know it for now. For some industries though, Covid-19 represents a very long term problem and has pushed their business to the brink of collapse. Here are 5 stocks that you should be wary of investing in or buying products from for now as they could be about to go bankrupt and take your money with them:
The largest aeroplane manufacturer in the world already had problems in 2019 when the 737 max, their brand new plane, was found to be responsible for 2 fatal crashes and all of their 737's were subsequently grounded at a cost of $20 billion to Boeing to date.
These safety issues, combined with billions of dollars of unusable aeroplanes and a worldwide travel ban, have made Boeing's forecasted $6.8 trillion dollars of commercial plane sales this decade look almost impossible. The company has been very open recently and has explained that it will go bust unless the US government bails them out. Although they are likely to be given help in order to save hundreds of thousands of jobs, there's still no guarantee that this will be enough! However, given its position as the leading aeroplane manufacturer in the world, Boeing is likely to survive the current crisis and if it does then its share price could easily double.
Click HERE to see 10 more stocks that could double your money over the next 12 months.
2. AIRLINE COMPANIES
It's probably no surprise to anyone that several airlines have already gone bust following the Covid-19 related travel bans, airline closures and plane groundings this year. Some top market analysts have estimated that more than half of all airlines could go bankrupt within the next 12 months unless global travel resumes shortly. Airlines in the US currently look the safest as Trump has agreed to bail them out. However, companies across Asia and Europe are extremely vulnerable right now and should be avoided by those who aren't willing to take any big risks!
3. SHAKE SHACK
Restaurant stocks are in trouble right now quite simply because of government enforced closures and people being unable to go out to eat during this pandemic. As a result, there are now many restaurant stocks out there such as Shake Shack with weak balance sheets that probably can't support themselves beyond the next 6-9 months.
Unfortunately, if people are advised to stay indoors and restaurants remain closed until sometime after the summer then it's unlikely that poorly profiting business' such as Shake Shack or those in a lot of debt such as Denny's will survive.
4. OIL AND GAS
Here's another whole industry to steer clear of right now! Demand for oil is currently at a record low thanks to the huge reduction in global travel due to Covid-19. Therefore, Saudi Arabia, Russia and now the US are currently in a 3 way war to sell as much unwanted oil as possible. This is causing the price of oil to plummet but also the share prices of the companies that sell it. The majority of oil and gas stocks have now fallen by over 60% and unless demand for oil increases soon then we could se a wave of bankruptcies across the entire oil and gas ecosystem.
Unfortunately, the businesses most likely to fall victim to this likely crash are the small oil and gas companies whilst major players such Exxon, Chevron and Shell are likely to weather the storm.
BP however has a completely different strategy to the rest of the major oil and gas companies and plans to continue to invest billions whilst everybody else makes large cutbacks and reduces costs. If the price of oil stays low for longer than a year, I think BP could be the first major oil and gas company to go bankrupt!
5. ROYAL CARIBBEAN
We all heard about the thousands of tourists across the world who were stranded on cruise ships this year and it has become pretty clear that cruise ships are a hotbed for germs, infection and one of the last places you want to be during a virus pandemic. In my opinion, people aren't going to forget this any time soon and if sales decrease significantly then we may not be seeing companies such as Royal Caribbean and Norwegian cruises in the cruise ship industry next year. This is because Royal Caribbean will likely have to cut its dividend which could send investors packing whilst Norwegian doesn't even offer a dividend so what's the point of leaving your money with them in a recession?
So that's my opinion on the stocks that could be fighting to survive over the next couple of months. You could argue that the stock prices of these companies represent a good opportunity and that certainly will be the case for a few of them however, it's also important to account for the real risk that's attached to these stocks right now and you could lose your entire investment. I for one won't be buying additional shares in any of these companies right now but I did just buy shares in 5 stocks that should be immune to coronavirus, check out which stocks I bought HERE!
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