This story was originally published here.
While recovery has slowed somewhat over the past month, markets continue to bounce back from their March lows. However, the novel coronavirus has done lasting damage. For some companies — airlines in particular — there is no clear path back to normalcy. Others were already in trouble, and the pandemic was the final straw. This is not the time to scoop up shares on the cheap. Instead, it’s time to clear house of these stocks to sell.
There’s not going to be a miracle recovery for these seven stocks. At least not any time soon. If any of these are in your portfolio, I suggest you get rid of them before they drag your investment down further:
Stocks to Sell: American Airlines (AAL)
American Airlines is in trouble.
The company has been burning through $70 million in cash every day since the coronavirus pandemic hit. American Airlines is reducing capacity, retiring some of its fleet early, it ceased hiring, paused pay increases and slashed marketing budgets. Despite all these measures, the best-case scenario has the company continuing to burn through $50 million a day starting in June.
That’s a big red flag.
In addition, the company is carrying roughly $34 billion in debt. American Airlines survived a 2012 bankruptcy, and there have been rumors it could be facing Chapter 11 again. Those rumors may not pan out, but even if it avoids filing, American Airlines faces a rocky future. At the start of the month, Evercore ISI slashed its price target for American Airlines shares to $1.
AAL stock has put together a mini rally since Friday, posting a gain (at the time of this writing) of 20% since Thursday’s close. Don’t read too much into that. American Airlines has rallied several times since March — each time in a matter of days it has dropped to lower than the rally’s starting point.
If you own AAL stock, be warned — it’s definitely among the stocks to sell right now.
Editor's Note: Click here to see the other six stocks.
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