10 Worst Retail Stocks to Bag Now

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On Friday, the Commerce Department announced that retail sales rose 1% in February, the eighth straight monthly gain and the largest rise in the past four months. Also notable is that January's retail sales were revised substantially higher to 0.7%, up from a 0.3% rise previously reported. Interestingly, economists were expecting an even bigger gain of 1.3% in the wake of impressive February same-store sales growth.

However, the University of Michigan/Reuters survey reported Friday that consumer sentiment declined to 68.2 from 77.2, and consumer expectations plunged to 58.3 from 71.6. This survey is very sensitive to gasoline prices, which explains the sudden turnaround.

I follow the retail report closely as it shows the total receipts of retail stores, and these changes give good insight into what people are buying and how willing they are to part with their hard-earned money.


In the darkest days of the financial crisis and throughout the recession, I have recommended, and profited from, retail stocks. There are some companies that can do quite well in this environment and can reward smart investors. However, with the increasingly positive economic news coming out, I don't want you to drop your guard when it comes to retail stocks. Some of these big-name companies are still struggling, and just because retail sales may be positive on the whole, it doesn't mean these companies will benefit.

The following are retail stocks to sell in March:

Retail Stock to Sell #1 - Eastman Kodak (EK)

Eastman Kodak Co. (NYSE: EK) Eastman Kodak Co. (NYSE: EK ) has been on my hit list for much of the past 12 months, but when the company broke its promise to turn at least some segments profitable in 2011, it was the last straw. The company has been struggling to make the transition from a print photo company to a digital photo company. In February, the company announced some awful results that sent the stock into a tailspin. Without a major turnaround plan, this company is going nowhere.

Retail Stock to Sell #2 - HHGregg (HGG)

HHGregg Inc. (NYSE: HGG) HHGregg Inc. (NYSE: HGG ) thought it had won the lottery when Circuit City went out of business, but that euphoria was short-lived. The stock has been in free fall since late 2010, when the company started cutting expectations, reporting disappointing sales and was downgraded. Investors have swooped in to short the stock, and I think that's the right side to be on with this stock right now.

Retail Stock to Sell #3 - LeapFrog Enterprises (LF)

LeapFrog Enterprises Inc. (NYSE: LF) LeapFrog Enterprises Inc. (NYSE: LF ) has taken a dramatic nosedive in my grading system in the past few weeks. It has plummeted from a solid B ("buy") to an F ("strong sell") in my Portfolio Grader tool as inventories stacked up when moms and dads didn't buy junior the technology-based learning devices the company has to offer. Children's products are often fads that come and go, and it looks like this suite of products may be on the outs.

Retail Stock to Sell #4 - Martha Stewart Living Omnimedia (MSO)

Martha Stewart Living Omnimedia Inc. (NYSE: MSO) Martha Stewart Living Omnimedia Inc. (NYSE: MSO ) has had a rough go since its IPO in 1999, and the results aren't getting any better. In the just-reported fourth quarter, net income was down 80% on falling revenue and increasing costs. This is a deadly combination, and while consumers are more optimistic, I don't see it translating into significant increases in sales of Martha's products.

Retail Stock to Sell #5 - RadioShack (RSH)

RadioShack Corp. (NYSE: RSH) Despite its effort at becoming hip and cool by changing its name officially to "The Shack," RadioShack Corp. (NYSE: RSH ) is another stock I wouldn't touch with a 10-foot pole. The gadgets purveyor has fallen far from its perch as it's been edged out of its industry by larger electronics stores, like Best Buy Co. (NYSE: BBY ), and online retailers. In its latest quarter, the company posted a modest increase in sales, but its earnings declined year-over-year and missed estimates. Set this stock aside and let it recharge for a while.

Retail Stock to Sell #6 - Staples (SPLS)

Staples Inc. (NASDAQ: SPLS) Staples Inc. (NASDAQ: SPLS ) is another company whose sales are being undercut by online discount stores. Staples may "got that" when it comes to office supplies, but its quarterly financial results are seriously lacking. In its latest filing, the company reported a quite modest increase of 0.1% in sales and earnings that missed estimates. Management blamed the winter weather for the poor performance, but the chilly forecast they should really be focusing on is the one for the company's stock. Stay away from shares at this time.

Retail Stock to Sell #7 - Avon Products (AVP)

Avon Products Inc. (NYSE: AVP) Avon Products Inc. (NYSE: AVP ) claims it can make you rich if you sell its products, but I'm telling you investing in this retail stock won't make you a dime. Shares have entered a bit of a free fall ever since the company announced a 15% drop in earnings and only a small increase in sales in its latest financial report. AVP may be able to change things around in the future, but for now, this stock is a strong sell.

Retail Stock to Sell #8 - bebe stores (BEBE)

bebe stores Inc. (NASDAQ: BEBE) bebe stores Inc. (NASDAQ: BEBE ), a maker of women's clothing and accessories, didn't make much of an impression on shoppers this holiday season. That's why the company lowered its earnings forecast at the height of the shopping season. Despite discounting its merchandise and offering sales, the company still posted lower-than-expected earnings and uninspiring sales growth. Stay away from BEBE at this time.

Retail Stock to Sell #9 - Rosetta Stone (RST)

Rosetta Stone Inc. (NYSE: RST) Rosetta Stone Inc. (NYSE: RST ) makes language-learning software, and while the company is a favorite of major government agencies, including the State Department's Foreign Service Institute, it is not on my top stock list. The company went public two years ago, just as the market started its big run, but the stock has failed to gain traction. The company's latest financial report, which showed a 59% decline in earnings, only put further downward pressure on shares. Give this stock some time to learn the language of the market before investing in it.

Retail Stocks to Sell #10 - Syms Corp. (SYMS)

Syms Corp. (NASDAQ: SYMS) Syms Corp. (NASDAQ: SYMS ) offers discounts on designer clothing and is a business that you think would have done well with frugal shoppers - not the case. The company has continued to report losses, and while the acquisition of Filene's Basement has helped the business on paper, the stock is no bargain right now.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Stocks

Referenced Stocks: EK , HGG , LF , MSO , RSH

Louis Navellier

Louis Navellier

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