Much like baseball, the investing game yields success through mitigated failure, which brings us to the topic of doomed stocks to avoid. No matter who you are, you will never achieve a perfect lifetime record in the capital market. It’s absolutely inevitable that you will get things wrong. It’s how we manage the next step that matters.
For instance, you might have done everything right – conducted deep due diligence and assessed various opinions before acquiring a particular company. However, for whatever reason, your choice investment became one of the high-risk stocks instead. It happens. Welcome to the club. But from here, you’ve got to consider dumping toxic names from your portfolio before they cause further damage.
Unfortunately, the meme trade narrative now clouds the tried-and-true narrative of exiting your losing ideas and sticking with your winners. Currently, retail investors often egg each other on to hold onto crimson-stained securities. However, more often than not, you’re better off dumping stocks destined for disaster.
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Because the topic of doomed stocks to avoid arouses much controversy, I’m going to keep this write-up direct and focused on the facts. First up is G Medical Innovations (NASDAQ:GMVD), a healthcare mobility specialist that allows its users to monitor their vital signs through their smart devices. Although it sounds like a convenient and intriguing innovation, the market simply doesn’t care for it. Since the Jan. opener, GMVD gave up nearly 88% of its equity value.
With that, you can pretty much write off G Medical as one of the high-risk stocks to steer clear of. Another immediate concern is that shares trade hands for only 33 cents a pop. With a market capitalization of less than $5 million – and you’re reading that correctly unless Google Finance made a mistake on its end – I don’t see how GMVD will continue being listed.
Yeah, management can issue a reverse split. More than likely, though, investors will see through such a cynical action. Perhaps most worryingly, investment data aggregator Gurufocus points out that GMVD suffers from eight red flags, including the issuance of long-term debt. Do yourself a favor and just say no.
T2 Biosystems (TTOO)
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A medical equipment specialist, T2 Biosystems (NASDAQ:TTOO) is a leader in the rapid detection of sepsis-causing pathogens. According to its corporate profile, T2 is dedicated to improving patient care and reducing the cost of care by helping clinicians effectively treat patients faster than ever before. Sadly, despite the intrigue that T2 offers, it simply ranks among the doomed stocks to avoid.
A case in point is its market performance, down nearly 91% since the beginning of this year. I’m sorry but such a severe loss is usually the kiss of death. Another reason why TTOO appears as one of the stocks destined for disaster centers on its per-share price. At only 15 cents, its days listed on the Nasdaq exchange are numbered. Also, in this case, T2 carries a market cap of less than $4 million.
Our good friends at Gurufocus don’t have much to say about TTOO other than to run – run fast! Per the data aggregator, the company suffers from poor financial strengths. Also, its Altman Z-Score sits at 28.82 below zero, indicating extreme distress. Basically, T2 suffers the risk of bankruptcy in the next two years.
Inpixon (INPX)
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Based in Palo Alto, California, Inpixon (NASDAQ:INPX) states that it specializes in capturing, interpreting, and giving context to indoor data so it can be translated into actionable intelligence. Management labels its Internet-of-Things (IoT)-connected platform “Indoor Intelligence,” a trademarked term. Unfortunately, it doesn’t really matter what the company thinks of itself but rather investors. And they just don’t like INPX, rating it one of the doomed stocks to avoid.
Sorry for the blunt message. However, I don’t know what other interpretation you want from an enterprise that lost almost 90% of equity value since the Jan. opener. In the trailing one-year period, INPX hemorrhaged nearly 99%. Trading hands at 18 cents a pop, the Nasdaq will not tolerate its presence much longer. Also, we’re talking about a market cap of less than $8 million. For continued listing on the Nasdaq, publicly held shares must carry a market value of at least $15 million.
Not surprisingly, Gurufocus warns its readers that INPX may be a possible value trap. With an Altman Z-Score of 21.57 below zero, bankruptcy may be on the horizon. Thus, it’s one of the unstable stocks to run away from.
The9 (NCTY)
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Headquartered in Shanghai, China, The9 (NASDAQ:NCTY) might surprise some folks, making it one of the supposed doomed stocks to avoid that could leave me with an egg on my face. For example, since the start of the year, NCTY skyrocketed by nearly 76%. Also, it features a price tag of $1.02, just barely holding onto a sense of legitimacy. As well, its market cap lands at slightly over $32 million. So far, it appears safe.
Of course, appearances can be deceiving. Zoom out a bit to the trailing one-year framework and you’ll find that NCTY fell nearly 43%. In the past five years, it stumbled badly to a loss of more than 90%. Therefore, I still believe NCTY ranks among the high-risk stocks. Basically, the bag holding potential in this enterprise screams like a banshee.
As for the financial print, Gurufocus labels The9 as a possible value trap. Glaringly, it suffers from severely negative profit margins. In addition, it features a cash-to-debt ratio of only 0.78, ranking worse than 78.79% of its peers. Lastly, its Altman Z-Score of 15.41 below breakeven indicates extreme distress.
Moatable (MTBL)
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Offering only a vague description of itself, Moatable (NYSE:MTBL) states on its website that it acquires, incubates, and grows category-leading vertically structured Software as a Service (SaaS) businesses. Moatable features an intriguing portfolio, which includes Trucker Path, apparently the number one mobile app used by North American long-haul truckers, brokers, and fleet carriers.
Here’s the deal. Since the beginning of this year, MTBL slipped a bit more than 3%. That doesn’t sound too bad given the junk we’ve been through in the post-pandemic environment. However, in the trailing one-year period, MTBL tanked by 95%. Lifetime, investors that held on since the first public session are staring at over 99% losses. Based in Phoenix, Arizona but featuring operations around the world – including China and the Philippines – Moatable presents a strange framework. To be fair, the company shows a decent balance sheet with a cash-to-debt ratio of nearly 173 times. As well, it features strong long-term revenue growth.
However, its Altman Z-Score sits at 11.21 below breakeven. As well, Gurufocus warns it’s a value trap. It’s probably one of the doomed stocks to avoid.
Gaucho Group (VINO)
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Hailing from Miami, Florida, Gaucho Group (NASDAQ:VINO) operates under the directive to source and develop opportunities in Argentina’s undervalued luxury real estate and consumer marketplace. Further, Gaucho claims to have positioned itself to take advantage of the continued and fast growth of global e-commerce across multiple market sectors, with the goal of becoming a leader in diversified luxury goods and experiences in sought-after lifestyle industries and retail landscapes.
While the enterprise sounds compelling on many levels, it sadly ranks among the doomed stocks to avoid. For one thing, there’s the wildly volatile price action. At one point this year, shares traded hands at over five bucks a pop. Now, they sit at 53 cents. Since the Jan. opener, VINO cratered over 56%. If that wasn’t enough, in the past 365 days, shares stumbled more than 90%.
With a market cap of only $3.52 million, Gaucho is on borrowed time. Financially, the company suffers from hideously negative margins, red-ink-stained sales growth, and poor fiscal stability. Plus, with negative free cash flow to boot, VINO is one of the stocks destined for disaster.
Soluna (SLNH)
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Billed as the leading developer of green data centers, Soluna (NASDAQ:SLNH) converts excess renewable energy into global computing resources. The company builds modular, scalable data centers for computing-intensive, batchable applications such as cryptocurrency mining, artificial intelligence, and machine learning. Per its public profile, Soluna provides a cost-effective alternative to battery storage or transmission lines.
Though compelling, I’m afraid the most realistic outcome for SLNH is one of the doomed stocks to avoid. Since the beginning of this year, Soluna shares tumbled nearly 25%. And that’s a good performance relative to its one-year look, which sees SLNH plunge almost 95%. With shares priced at 23 cents a pop and featuring a market cap of only $13.52 million, the Nasdaq exchange will soon tire of its presence.
It’s probably no surprise, then, that Gurufocus warned that Soluna suffers from nine red flags. Using the data aggregator on a daily basis, I don’t think I’ve ever seen nine red flags. Anyways, with inventory build-up and the consistent issuance of debt, Soluna is one of the unstable stocks to quarantine.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
