2017 was a solid year for share market investors. The benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) rallied 7.1% or more than 11% including dividends, which is a substantial return when you compare it to the tiny returns on offer to stash your money in the bank.
Investing in shares for the long-haul has proven to be a great way to build one's wealth. But although the market itself may be expected to track higher, over time, that doesn't mean investors should expect every individual share to do the same.
With that in mind, here are a few companies investors ought to be wary of going into 2018:
JB Hi-Fi Limited (ASX: JBH) is a retailer that specialises in products such as televisions, gaming consoles, laptops and various other electronics goods. The company is also big on white goods, particularly after its acquisition of The Good Guys late in 2016.
I'm a frequent customer at my local JB Hi-Fi, and enjoyed receiving many gift cards for the store from my family at Christmas (it's also worth noting that the store I regularly attend is always full of customers). While I would love to watch this company continue to grow and succeed however, investors do need to be mindful of the impact that e-commerce titan Amazon.com, Inc. (NASDAQ: AMZN) could have on the business now that it has expanded into Australia. JB Hi-Fi's shares declined 11% in 2017 and, although they could surprise to the upside, investors ought to be careful.
JB Hi-Fi has historically proven its ability to adapt to the times, and the fact that I often see large crowds in the company's stores does give me some comfort. However, I can't say the same for Myer Holdings Ltd (ASX: MYR).
A department store group, Myer is really struggling to remain relevant today. Investors watched as various brokerage houses cut their price targets on the business late last year, with some (including Credit Suisse and UBS) suggesting its shares are worth less than they are currently trading for (their price targets are 56 cents and 60 cents, respectively, compared to a current price tag of 66 cents).
Myer issued a trading update on 14 December stating that sales and profit had deteriorated in recent weeks following a subdued performance during the first quarter. It also noted that reduced foot traffic continues to hinder the business and it is difficult to see that changing anytime soon.
Finally, GetSwift Ltd (ASX: GSW) made a lot of its early backers very happy as its shares soared more than 1,100% over the course of 2017. However, although the company (which provides a delivery management solution) has announced deals with a number of large global businesses (including the aforementioned Amazon.com), its announcements are regularly (very) light on detail while the business is yet to generate any meaningful revenue. With shares already rising strongly during 2017, this is one to watch from a distance on the sidelines.
Although investors ought to be wary of owning these businesses, that isn't to say they won't rise during the year. However, I believe that investors' wealth would be better suited elsewhere.
