Four Stocks That Will Not Bounce Back in 2013
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a 52-week period where the S&P 500 is up over 16%, not all stocks have enjoyed such success. I’m going to take a look at four stocks that took a nosedive in 2012, and explain why they won’t be bouncing back in 2013.
Hewlett-Packard (NYSE: HPQ)
HP sank 43% since the beginning of the new year. Don’t look for dramatically improved results this year, either. HP CEO Meg Whitman has made it very clear that the company is focused on the long run—2016 at the earliest. The company plans to completely restructure several areas, including massive consolidation, more layoffs, and a new printer ink subscription service.
However, Whitman has told investors to not have very high expectations for the next couple years. So, take her warning and take your money away from HP for now, until they prove that they can be all that Whitman says better shareholder returns will be several years down the road.
RadioShack (NYSE: RSH)
RadioShack has been one of the biggest disappointments of the year, down 79% in 2012. I don’t know why I (or anyone else) have had faith in this small electronics company as of late. One walk to your local RadioShack store should tell you that they’re failing. Sure, several years ago, their business model seemed flawless. Now, however, it’s useless.
Very few people actually buy phones from RadioShack anymore (if they ever did) and increased mobile sales was one of RadioShack’s biggest hopes for 2012. It didn’t happen. For three quarters in a row, the company has posted large deficits, and it doesn’t appear to be suddenly turning around this quarter.
The only reason, really, to head to your local RadioShack nowadays would be to some sort of cord or converter for an electronic device you have. However, with most of these things available online (and for a lot less,) it’s hard to see the RadioShack advantage.
Best Buy (NYSE: BBY)
I have very mixed opinions on Best Buy. One of the reasons they are down 45% this year is because they have encountered a big problem: customers go to their local Best Buy store to essentially window shop—they look at and compare products in person, then go home and buy the product for much cheaper online.
However, this holiday season, Best Buy introduced an online price match guarantee in which they will (to a certain extent) match online advertised prices on the goods they sell in their stores. I don’t know how they are going to match these prices, but they claim that they will.
Even if this does help them in the holiday season, which I think it will, I don’t know how long they can keep that gig profitable. Or, how long it will last: they claim it is just a holiday season thing. So, with the possible exception of this winter, look for Best Buy to go the way of Circuit City.
Advanced Micro Devices (NYSE: AMD)
AMD fell 57% in 2012, and I don’t see it getting back up. While I applaud their valiant effort, it doesn’t seem as though they can compete well enough with microprocessor giant Intel (NASDAQ: INTC). The main issue for AMD is that the devices that typically feature their processing chips—desktops and laptops—are quickly falling. Newer computers are becoming reliant on Intel chips, and Intel is dominating the ever-growing tablet market.
Realistically, AMD, unless they find a way to penetrate Intel’s tablet dominance, is falling off the map. Intel has a dominant portion of the cell phone and tablet market in their hands, and they won’t let it go. AMD has fallen short of estimates two quarters in a row, and it doesn’t look like a sudden turnaround is in the books. There is a chance that AMD could recover, but that would take a prayer, and it would be far down the road anyways.
Foolish Bottom Line
These four stocks had a rough 2012, and I don’t see them bouncing back in 2013. Their problems are too massive for quick fixes, and the major overhauls that many of them have announced promise profitability—but not until 2015 or 2016. So, for the time being, steer clear. Or, at least, until they prove themselves worthy of all their promises.
Michael Nolan has no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy, Intel, and RadioShack and is short RadioShack. Motley Fool newsletter services recommend Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!