AVOID THESE 10 WORST PERFORMING SECTORS
If you desire to create or expand your portfolio, or realign your investments, take note of the 10 worst performing industries this year.
Computers: Peripheral Equipment
The sector is not trading on the long or short side. Take a look at the companies within this industry. You will be surprised to find a wide scale of firms based on their bottom-line performance and top-line performances, as well as debt levels.
Transportation: Equipment & Lease
Corporations in this sector include commercial jet sales, supply chain solutions, and manufacturers and marketers of railroad freight cars. As of the moment, they are cutting their costs on the products and services offered by the industry.
Engineering and Research and Development Services
Most clients are either private entities or the government. Firms are reducing their expenditures and the government lower excessive debts. Hence, the outlook is gloomy for this sector.
Oil Gas Production Pipeline MLP
The production is mostly engaged to pipelines and storage for oil and natural gas. Since several entities are created to ease the decrease in energy prices, the low performance denotes the decline in energy prices in the last few years.
Computer - Storage Devices
Research is conducted on a case-to-case basis. There might be some good long opportunities, but a bear market might emerge. Having said that, this is not an industry that is likely to show sustainable growth in that environment in the future.
Mining - Silver and Gold
Like mortar and pestle, silver and gold come together. Since they trade together, they create a lot of confusions about these two commodities. In a deflationary setup, gold does not accelerate, but is only a safe hedge against inflationary pressures. Too many investors are losing money by believing gold and silver will escalate if the stock market tanks; therefore, rendering a safe hedge against their long positions. While there might be a short-term spike in these two, they won’t prevail well in such environment. But the US dollar will appreciate. In the longer run, when global deleveraging is finished and organic growth returns, inflation won’t be hampered, making gold and silver reach record highs. However, gold and silver are in years down the road.
Since it has no future upbeat catalyst, coal is considered worse than other commodities, especially gold and silver. The industry is noticing bigger than projected losses from individual producers, a lot of cash, bankruptcy announcements, and now President Barack Obama unveiled carbon emissions will be reduced by 32% come 2030.
Churn rate is the only problem we see in this sector. It refers to the percentage of subscribers to a service that terminate their subscription to that service in a particular time period. Now, for wireless firms to curb churn and retain clients, they have to reduce prices. That results to lower revenues and profits, contracting margins. As a result, it will impact stock prices.
Transportation - Truck
Since summer last year, oil prices have been declining. But why is the industry dwindling? It all boils down to companies’ cost-cutting and lack of demand, another deflationary cue.
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