Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Death Spiral

Stocks to Dump in 2017

The early signs indicate that 2017 might be a great year for the stock market with the Dow over 20,000 for the first time. Despite that there are some stocks that will sink like stones in 2017 even as the market heads to new highs.

That means there are some equities you should throw out of your portfolio right now. Disturbingly some big names; that were once among the best and brightest in stocks, are now among the deadwood you need to jettison.

Stocks to Avoid in 2017

Just a few of the stocks that you should avoid like the plague in 2017 include:

  • Exxon-Mobil (NYSE: XOM) – the world’s largest oil company’s revenues fell by $71.47 billion between September 2015 and September 2016. Exxon started the 12-month period with $296.35 billion in September 2015 and finished with $224.88 billion. Exxon is still making money and paying a dividend but that might soon end. Exxon-Mobil’s net income fell by $11 billion between third quarter 2015 and third quarter 2016. It started with a net income of $19.94 billion and finished with $8.94 billion. If that performance repeats net year the company will be operating at a loss like many of its competitors.


  • This might be the real reason why Exxon-Mobil CEO Rex Tillerson is so anxious to join President-Elect Trump’s cabinet; he owns 2.6 million shares of XOM, Fortune reported. If he becomes; or tries to become, secretary of state Tillerson would be required to sell those shares to avoid “conflict of interest” charges. Tillerson would be able to collect a $275 million payday; dump stock that is about to collapse, and avoid charges of being disloyal to the company. If Rex is so anxious to dump XOM the rest of us should follow suit.


  • Target (NYSE: TGT) – This retail giant’s revenues fell by $1.17 billion during third quarter 2016. Dropping from $71.6 billion July to $70.43 billion in October. Target is still making money, but its’ revenues shrank by $3.5 billion in a year between September 2015 and September 2016. One has to wonder how long this company can sustain a $77.13 a share stock price reported on December 21, 2016. Particularly with foot traffic that fell by 2.2% and sales that fell by 1.1% during the third quarter.


  • Macy’s (NYSE: M) – Sales were so bad at this retailer that its management decided to close 100 stores in August. Macy’s revenues fell by $1.98 billion between January and October of 2016. More disturbingly its revenues have been falling for seven quarters straight since January 2015.


  • Kellogg (NYSE: K) – The cereal maker’s revenues have been falling for over three years since June 2013. During that period revenues fell by $1.8 billion, meaning the company lost more than 10% of its revenues. Kroger’s revenues peaked at $14.86 billion in June 2013, by September 2016 they had fallen to $13.06 billion. More disturbingly Kellogg’s net income is less than half of what it was just two years ago. Kellogg reported a net income of $1.845 billion in June 2014 and $706 million in September 2016. One has to wonder how this company can maintain its dividend at this rate.


  • McDonald’s (NYSE: MCD) – This company’s revenues have shrank by $3.37 billion in the past two years. Mickey D’s reported $28.3 billion in in revenues in June 2014 and $24.93 billion in September 2016. What’s truly worrisome under the golden arches is that revenues have fallen every quarter since second quarter 2014. To make matters worse this stock is grossly overpriced – it was trading at $123.28 a share on December 27, 2016.


  • Twitter (NYSE: TWTR) – This turkey is rapidly heading towards to the junk pile. It achieved a profit of margin of -16.7%, a return on equity of -8.52%, and a net income of -$380 million on September 30, 2016. To make matters more interesting, there are media reports that indicate major companies; including Disney (NYSE: DIS) and com (NYSE: CRM), abandoned offers to buy Twitter because of the site’s lousy reputation.


  • Netflix (NASDAQ: NFLX) – This market darling is both grossly overpriced ($128.38 a share on December 27, 2016) and burning through cash like crazy. Netflix reported a negative free cash flow -$489.31 million on September 30, 2016. That was nearly five times the negative free cash flow of $-74 million on September 30, 2014. Then there was the cash from operations -$1.162 billion for third quarter 2016. One has to wonder if this company will survive or ever make any money.

Investors that want to see their portfolios grow should avoid all of these stocks in 2017. Even though the market will probably grow in 2017 these shares will not.