Following reporting season, you should have a much clearer picture of how your ASX shares are tracking along and whether it’s time to re-adjust your portfolio. Reading and understanding a company’s reports will reveal its financial health and future growth profile.
As some ASX shares have performed better than others, it’s important to understand which companies present value and which could be riskier to put your hard-earned cash towards. On that note, below I have picked which ASX shares I would avoid buying during this economic crisis.
4 ASX shares I would avoid buying this year
Myer Holdings Ltd (ASX: MYR)
The Myer share price has been gaining back some ground since its fall to 8.3 cents in March. Today, the Myer share price can be picked up for 26.5 cents per share, up over 200% from its March low. However, looking at the last 12 months, this ASX share has fallen from 61.5 cents, a drop of almost 57%.
Last month, Myer released its latest update advising it had secured an amended debt facility of $340 million to see it through the pandemic. No covenants will be tested before FY20, given the significant impact on Myer’s operations during 2H20. Covenants for future periods will be tested quarterly, with the $340 million bank facility to be repaid by August 2022
Furthermore, Myer said that COVID-19 had severely impacted trading during the second half of FY20. The company has initiated cost control measures as well as rent relief and deferrals.
Myer is expected to report its FY20 results this Thursday 10 September.
QBE Insurance Group Ltd (ASX: QBE)
QBE has had a turbulent year, to say the least. The company reported its FY20 results in August which saw a monstrous net loss of US$712 million. This was followed in September by the shock exit of QBE’s CEO from an external investigation concerning workplace communications.
Investors have been quick to hit sell on this ASX share which has seen the QBE share price tumble from $15.19 in February to $9.82 today. That’s a decline of 35%, and over 8% in the last week from the board’s announcement of the new leadership change.
The insurance group warned its outlook remains uncertain as government actions continue to significantly impact revenue drivers. COVID-19 is expected to have a total cost of around US$600 million to QBE, including US$265 million of potential further net claims in the next 12-18 months.
The company’s decision to support customers through offering premium refunds, premium deferrals, extending credit and counselling services will likely further effect future earnings.
Southern Cross Media Group Ltd (ASX: SXL)
One of Australia’s largest media companies, Southern Cross reported a staggering decline of underlying net profit of $35.8 million in its FY20 results, down 51.6% on the prior year.
The company has experienced fierce headwinds from COVID-19 with revenue down 18.2% in both audio and television segments. Southern Cross suspended all dividend payments for FY21, and forecasts to resume paying dividends in FY22.
Shareholders have largely sold off their positions in this ASX share over the past 12 months. This time last year, the Southern Cross share price was fetching for $1.24 compared to just 15.5 cents now. This represents a freefall of 88%.
The media company is looking to recover its underlying earnings and reduce expenses to see it through the challenging climate. Southern Cross completed a recent capital raising of $169 million.
Scentre Group (ASX: SCG)
Scentre has been another poor performer on the ASX this year. The shopping centre operator’s HY20 results disappointed investors with a deep first-half statutory loss of $3.61 billion, down from a profit of $740 million in the prior corresponding period. COVID-19 restrictions prevented many shoppers from visiting its malls and weighed on valuations of retail property assets of the ASX share.
The leading retail property group indicated that the pandemic risks stretched into its balance sheet, despite $4.4 billion of liquidity available.
The company has accelerated customer engagement platforms and other programs to support revenue growth.
The Scentre share price is trading at $2.18, a drop of 47% from its 52-week high of $4.08.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.
- Why the Nexion (ASX:NNG) share price is racing 8% higher – February 25, 2021 3:43pm
- PolyNovo (ASX:PNV) share price advances 4% higher on market update – February 25, 2021 2:22pm
- Why the Althea (ASX:AGH) share price is surging 8% higher today – February 25, 2021 12:52pm