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Naturally, I’m inviting egg on my face with a headline such as this. That’s because stocks can go up and down in unpredictable ways. Shares that I don’t rate go on to prove me wrong all the time.
That said, here are three stocks that I personally wouldn’t touch with a 10-foot barge pole.
BT Group
The first stock on my list is BT Group (LSE: BT.A). The telecoms giant appears to be in constant restructure mode, trying to unlock some sort of shareholder value. Yet the share price has declined by 49% in five years and around 66% over 10 years.
Meanwhile, the dividend is now half what it was just five years ago. Slow growth and rising costs are hurting the group’s margins and its net debt stands at an eye-watering £19.9bn.
Worryingly, it is also facing increasing compensation from rival telecom companies and there were staff strikes last year.
Now, BT recently named industry veteran and board member Allison Kirkby as its new chief executive. Maybe she can breath some life into the share price. But, personally, I’m not banking on it.
AMC Entertainment
Next up is US meme stock AMC Entertainment (NYSE: AMC). The share price has lost 98.5% of its value since surging to reach an all-time high in June 2021. Yet I still wouldn’t invest in the theatre operator.
Why? Well, I’d have to change this a title to 1 stock I’d avoid at all costs! to state all my reasons. But let’s focus on profitability first…Oh, there aren’t any profits.
So, let’s consider the firm’s recent announcement that it’s selling up to 40m shares. This shareholder dilution comes less than a month after it announced a 1-for-10 reverse stock split to increase capital. AMC’s total common shares outstanding has increased more than tenfold in the last few years.
These desperate fundraising measures aren’t the sign of a healthy enterprise. Perhaps management can conjure up some growth initiatives with the capital to offset the long-term structural decline of moviegoing.
Again, though, I’m not banking on it. And I don’t think the ongoing Hollywood strikes are helping cinema chains.
RC365
The third stock I consider to be a potential landmine is fintech firm RC365 Holding (LSE: RCGH). Like AMC, this is a stock that surged out of nowhere with very little in the way of underlying fundamentals to back it up. Since reaching 165p in July, the share price has lost 68% of its value.
Now, unlike the previous picks, RC365 is at least operating in a high-growth market. It runs a secure payment gateway service and offers IT solutions in Asia.
While this region is tipped for stellar long-term growth, China, its largest economy by far, is struggling right now. This economic backdrop isn’t conducive to explosive growth, which is what RC365 stock is all about.
Plus, even after its recent collapse, the stock is trading on a price-to-sales (P/S) ratio of 43. For context, a P/S multiple of 10 is generally considered unreasonably expensive.
Finally, the company only went public in 2022, so it doesn’t have much of a public market record for investors to assess. Overall, the stock is highly speculative, and I’d personally avoid it at all costs.