It can sometimes be dangerous to buy stocks and forget about them. While it may be a potentially good strategy for blue chip stocks that generate dividend income and offer long-term stability, it can be quite another thing to hold stocks of companies that have poor financials and growth prospects.
If you're holding high-risk investments, then anytime can be a frightful time to look at your portfolio; it doesn't need to be Halloween for you to be scared. And three of the scariest stocks to be holding onto today includeWalgreens Boots Alliance (NASDAQ: WBA), Spirit Airlines (NYSE: SAVE), and fuboTV (NYSE: FUBO). Here's why you'll want to think twice about holding these investments in your portfolio.
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Walgreens Boots Alliance
Pharmacy retailer Walgreens Boots Alliance faces an uncertain future ahead. Competition has been intensifying over the years from Amazon and Walmart, and both companies are now also ramping up efforts to offer same-day prescription delivery throughout the country. That could make it more difficult for Walgreens to grow without incurring deeper losses.
Walgreens has typically generated single-digit profit margins when conditions have been good. Nowadays, however, it struggles to stay out of the red entirely. In an effort to improve its financials, the company is planning to shut down 1,200 stores during the next few years, and it's looking at selling other assets as a way to generate some much-needed cash flow.
The healthcare company has incurred an operating loss of around $1.6 billion over the trailing 12 months and Walgreens has a long way to go in proving to investors that it's a tenable stock to hang on to. In five years, it has lost 83% of its value and there's little reason to be optimistic that it's going to turn things around anytime soon.
Spirit Airlines
The airline industry is highly competitive, and one company that has struggled to keep up is low-cost carrier Spirit Airlines. While it has been growing its business over the years, it has also incurred losses while doing so. In each of the past four years, Spirit's net loss has been more than $400 million.
Investors are concerned about the company's ability to stay in business. Spirit is working on cutting costs and is reducing its workforce while also selling some older planes, which could generate around $519 million. There are also reports that it may merge with Frontier, which may help it become stronger and put it in a better position to compete in the long run.
Investing in airline stocks is risky today as travel demand could be softening in the near future as consumers potentially scale back on vacation plans amid a possible recession on the horizon. Throw into the mix Spirit's poor financials, and this becomes an even scarier investment to hang on to. In five years, Spirit stock has lost 93% of its value.
fuboTV
Streaming company fuboTV faces a lot of competition in the industry as content is carved up among many big players. Obtaining rights to stream content is only going to get more expensive in the future, especially for sports, with Amazon eyeing a lot of games for its Prime Video streaming service. Some competitors have also tried to team up, and while for now, fuboTV has dodged a bullet with a judge temporarily blocking Venu, a combined service from Fox, Warner Bros. Discovery, and Walt Disney, it may only be a matter of time before some form of consolidation takes place.
It's not hard to see why it may be necessary for companies to join forces, as many streaming services find it difficult to turn a profit, and fuboTV is a great example of that. The company generates low gross margins, oftentimes in single digits, making it extremely difficult for the business to have any hope of turning a profit; last year, it incurred an operating loss totaling $289.4 million on revenue of $1.4 billion. Unless fuboTV teams up with another streaming company, it may be difficult for it to have a realistic chance of staying out of the red while offering a competitive service.
Over the past five years, fuboTV investors have seen the stock go on an 85% decline, and things may not necessarily get a whole lot better here on out.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Walmart, Walt Disney, Warner Bros. Discovery, and fuboTV. The Motley Fool has a disclosure policy.
