4 Stocks To Avoid In 2019

Will the Fed increase rates further?


U.S public companies are fighting against a bear market this week after significant declines from Tuesday. Investors have experienced the worst December declines since 1931. The last time we saw a December perform this bad was in the Great Depression and was called the “double dip”. The “double dip” and this December’s performance have similar driving factors, mainly the Federal Reserve.

The Fed’s Impact On U.S Equities

The Fed have hinted towards further rate hikes in the near future, which puts a strain on market outlooks. Investors are hoping that the Fed will pause further rate hikes in fiscal 2019. If we see rates increase much higher, many analysts are forecasting mass selloffs.

The stock market experienced noticeable declines on Wednesday after Fed Chairman, Jerome Powell, spoke at a recent press event where he discussed increasing the interest rates. The S&P 500 has posted losses on every day that the Fed has announced further interest rate hikes since Powell has been Chairman.

We are looking at equities that have suffered severely from recent market declines and which ones are likely to experience further selloffs. These are our top picks for “stocks to avoid” in 2019 if the Fed increases rates further.

Exxon Mobil (NYSE: XOM)

Exxon mobil stock
Exxon mobil stock

Exxon shares have dropped below its trading levels that have not been seen since before summer. The last time Exxon Mobil stock price fell so low was back in April. In the last month, the Exxon Mobil stock price has dropped by over 10% and 14% year-to-date.

Exxon is posting its next report in February, analysts will be expecting earnings per share to reach $1.23 and revenues to reach $83.3 billion. Investors are bracing for what could be an era that we saw in 2014, when oil prices hit their lows and Exxon stock price followed suit.

Lowe’s Companies (NYSE: LOW)

Lowe’s stock price has been volatile as concerns regarding the housing market are at the forefront of investor’s minds when looking at Lowe’s stock. Lowe’s shares are trading below its 50 and 200-day moving averages, which is worrying to say the least. The company’s shares are trading at almost 22% below their September highs.

February 27 will mark the date that Lowe’s posts its next earnings report, analysts forecast earnings of 80 cents per share and revenues of $15.8 billion.

General Electric (NYSE: GE)

GE stock
GE stock

It is clear to investors that GE shares do not have short-term upside potential. General Electric stock price is down nearly 60% for the year, making the company the second-worse performing company on the S&P 500 index, with beauty company Coty the only company performing worse.

GE has been labelled an “unmitigated disaster” by some and others saying the company “seems to resemble a rudderless boat”. While these statements vary on who you’re asking, one thing cannot be argued and that is GE’s dividend payouts… or lack of them.

The GE dividend has been cut to a penny in attempts to fix the debt it is in. For investors who are looking for an income from their shares, GE is not the company to engage in. The amount of challenges that GE faces makes the company a hard sell. For most investors, it is one of the stocks to avoid.

Qualcomm (NASDAQ: QCOM)

qualcomm stock
qualcomm stock

Qualcomm shares are trading below their 50 and 200-day moving averages, with QCOM’s September highs being reversed.

This year has been a rollercoaster ride for Qualcomm stock as the company has been involved with a flurry of legal challenges. The company has been in a court battle against Apple regarding a patent infringement claim. We also saw Qualcomm fight against Broadcom’s hostile takeover attempt. Not forgetting the failed merger with NXP Semiconductors.

While the downturns that QCOM stock is experiencing may mean an entry point for investors, it is likely that QCOM won’t be making any significant gains anytime soon. The upside to Qualcomm shares is that it pays a strong dividend yield of 4.3%.