We’re officially in a bear market, and that creates a challenge for optimistic investors. Right now, almost any stock can look like a bargain — some even trade more than 50% off 52-week highs. It almost feels like you could buy anything and do well once the market recovers. But it’s important to remember that we aren’t trading stocks because we think they can bounce back in the short term. We’re investing in companies we believe will create meaningful shareholder value for years to come.
It’s as simple as this: If you didn’t like the business before the market crashed, it’s probably still not a good idea to buy it now. With that in mind, here are two down stocks I’m still avoiding at all costs.
1. DISH Network
Satellite TV provider DISH Network‘s (NASDAQ:DISH) stock is down more than 50% from this year’s highs, and now trades at just eight times trailing earnings. That certainly sounds cheap. But the company was facing challenges well before the coronavirus sent its stock tumbling.
People are canceling traditional pay-TV and moving toward on-demand streaming — that’s a well-known trend. This hurts DISH Network’s core satellite business. It lost around 500,000 satellite subscribers in 2019 alone. The company is astute enough to realize it needs a streaming option, which is why it has Sling TV. However, even Sling TV lost 94,000 customers in the fourth quarter of 2019, as new streaming competition came online. That’s not really a business I have confidence in the long-term.
To be fair, DISH Network is diversifying away from just pay-TV and toward being a cellular carrier. It’s acquiring Sprint‘s prepaid assets, which include Boost Mobile, for $1.4 billion. And as part of Sprint’s merger agreement with T-Mobile, DISH will get use of T-Mobile’s network at wholesale prices for seven years, as it builds out its own service.
This new business direction might just be… Continue reading the full article at The Motley Fool