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5 stocks I’m bearish on in 2018


I’ve recently written a few articles on stocks I believe will have a positive year in 2018, so here’s a shortlist of stocks whose prospects I am not so bullish on, as well as some better alternatives.

Retailing was a hot topic among investors in 2017, with Amazon’s arrival sparking negative sentiment towards many ASX-listed discretionary retail businesses.

While that negativity appears overblown for some, I am concerned about the future of large department stores like Myer Holdings Ltd (ASX: MYR). If you’re after some exposure to retailing, I suggest doing your research on Bapcor Ltd (ASX: BAP) and Greencross Limited (ASX: GXL) instead.

I wrote an article on Australian Agricultural Company Ltd (ASX: AAC) in September 2017, citing a lack of cash flow as a reason I wouldn’t invest. A quick look at the company’s FY2018 interim results presentation from November has not changed my opinion.

I believe Costa Group Holdings Ltd (ASX: CGC) and Huon Aquaculture Group Ltd (ASX: HUO) are better alternatives in the agriculture sector.

AMP Limited (ASX: AMP) is one of Australia’s oldest and largest wealth management firms. Despite the company’s strong position within its industry, long-term AMP shareholders have not benefitted and the share price is still well below its pre-GFC highs.

AMP released an improved set of results for the first half of 2017 and the company’s share price has risen almost 10% in the last three months, however I would need to see a longer history of earnings performance before I considered investing.

My preferred financial on the ASX is Challenger Ltd (ASX: CGF), a market leader in annuity investments.

Cabcharge Australia Limited (ASX: CAB) shares are down close to 50% over the past year as earnings fell 25% in FY2017 on lower service fee income. The taxi payment solutions and bookings provider is experiencing major disruption through regulatory change and intensifying competition from the likes of tech firm Uber. Further change looms as autonomous vehicle testing increases.

Taxi operators are upset by the perceived lack of support from governments, however their protests have included holding up CBD and airport traffic and thereby inconveniencing potential customers.

A lack of public support for the taxi industry was underlined by the Victorian Taxi Association’s failed #YourTaxis Twitter campaign in late 2015.

Coca-Cola Amatil Ltd (ASX: CCL) is suffering from declining Australian demand for high-sugar content, carbonated beverages. Sales volume for the company’s largest category, Australian sparkling beverages, fell 3.8% in the first half of 2017 compared to the previous corresponding period.

Amatil is performing well in its Indonesia and Papua New Guinea and Alcohol and Coffee business segments. However Australian Beverages earnings are declining. Australian Beverages represented almost 60% of the company’s underlying EBIT in the first half of 2017, though this contribution declined 13.2%.

Amatil is working to improve its product mix, but I won’t buy shares in the company before it can turn around its largest sales segment.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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Motley Fool contributor Ian Crane owns shares in Greencross Limited. The Motley Fool Australia has recommended Coca-Cola Amatil Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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