With the US economy still worsening and the stock market up and down like a yo-yo, investing in some American companies is more like playing Russian roulette than traditional investing normally is. With many US companies doing badly though, there are some companies struggling so much, if you're buying stock,you might want to avoid buying stocks in certain companies. Three of the companies, whose stocks you should consider carefully before buying, are Blockbuster, American Eagle Outfitters, and Bebe.
Blockbuster (BLOKA) - Blockbuster video and DVD stores have been failing for years. At one time, one of America's most successful companies, Blockbuster didn't see the writing on the wall when the internet hit big. So, by the time they had realized companies like Netflix were offering a much better deal to consumers than Blockbuster was, Blockbuster had opened too many stores and gone into an over-expansion that soon became their death knell.
Of course, they opened their own rent-a-movie service on the internet but it's never managed to capture the consumer base Netflix has. Now, Blockbuster has announced they're closing almost 550 stores nationwide, this after they closed 340 stores last year, in an effort to get a handle on expenses.
Some investors have bought Blockbuster (BLOKA) stock, but Blockbuster has yet to prove they can make a go of it and, in most reports, look like they're still going down to a possible result of 'out'. In the last five years, returns on investment in Blockbuster stock are down over 98% and they've yet to stay long in the positive column this year.
In fact, Blockbuster was recently delisted from the New York Stock Exchange, as Blockbuster stocks are now 'penny stocks'. As a penny stock, you could make money on day trading or short-term trading on Blockbuster stock, but it's as likely to go down as it is to go up, so be careful. Overall, a stock to avoid.
Bebe (BEBE) - I remember when I moved to LA years ago, how popular Bebe clothing was. With t shirts running $75 and more, the company was raking in the money and their expansion to a sportswear store, PH8, was highly trumpeted. Now, just a few years later, even celebrity sex video girl, Kim Kardashian's designs can't save PH8 stores. Bebe has announced they'll be closing all 48 of their PH8 stores in favor of concentrating on their main brand plus the 2b Bebe stores.
While stock prices are currently up on BEBE stock, that may not last. Kim Kardashian is a done deal, and no other celebrity has yet come forward to try to help Bebe back to its former glory. In the last five years, stocks have fallen 75% and stayed down, so a modest upswing of 5% this month probably won't remain. Consider the possible outcomes carefully before investing in Bebe. Right now, it's looking like a company whose stock you might want to avoid.
American Eagle Outfitters(AEO) - Another US company that couldn't keep up with fashion trends is American Eagle Outfitters. Their big downfall though was in copying the designs of Abercrombie & Fitch, (Abercrombie sued them three times), but copying them at a lower quality and with inferior designs.
American Eagle Outfitters (AEO) stock has had a bumpy ride the last five years with long-term returns on investment in AEO almost always in the negative. This month, they're showing a slight rise so far (8%) but, with their track record, it probably won't last. American Eagle Outfitters just announced they're closing 28 Martin + Osa stores as well as putting the shutters up at their online business. Another company that just isn't understanding the power of the internet.
With long-term investment in American Eagle Outfitters over the last five-plus years being a great way to lose money, be careful if you decide to invest in AEO. As of now, it's one to avoid.
Disclaimer - Of course, any of the recommendations I give to consider certain companies stocks are nothing more than my personal opinion, based on what I see in the stock market at the moment. You should always consult with a certified financial advisor before making investments in the stock market and should check up-to-date returns before making any investment decisions. The ultimate decision to invest in, avoid any stock, or sell any stock lies with you, the investor.
Sources:
Blockbuster Stock - Daily Finance
Bebe Stores - NASDAQ
American Eagle Outfitters - Daily Finance
10 Leading Retailers Shuttering Stores - Daily Finance
Unhappy Endings for Blockbuster - Barrons.com (recommends investors steer clear of buying Blockbuster stock, for the second time in just a few months)
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