A lot of investing advice tends to come in the form of what to buy and what’s poised to explode. But the other end of the spectrum, identifying companies that might be in trouble can be an equally lucrative skill. Whether one is trying to figure out a good time to sell or looking to find a stock to short, knowing when a stock’s on the verge of a fall can be very helpful. There’s clearly no guarantees out there, and any number of supposedly dead stocks have staged huge turnarounds, but here’s four stocks that, based on the data, appear to be in trouble.
Ferrellgas Partners (FGP)
Ferrellgas is an American propane supplier operating in all 50 states, the District of Columbia, and Puerto Rico and servicing both business and consumer interests. Ferrellgas certainly offers an attractive reason to invest in its excellent dividend yield of 12.53 percent, but hopes for long-term growth in the share price may be misplaced. Ferrellgas project relatively little EPS growth, and a forward PE of over 30. More concerning, though, is the net profit margin approaching -2 percent and the debt to equity ratio over 80.
Piedmont Natural Gas Company (PNY)
Piedmont Natural Gas is an energy services company that distributes natural gas to residential, commercial, and industrial customers in parts of North Carolina, South Carolina and Tennessee. The company is currently carrying a lot of debt, with a debt/equity ratio exceeding 1, and it’s operating margin of just under 8 percent isn’t leaving a ton of room to maneuver. What’s more, despite this, the stock’s up over 20 percent in the last year, leaving the company just 3 percent under its 52-week high and a PEG over 5.
Tootsie Roll Industries (TR)
For anyone with a sweet tooth, it might be difficult to believe that a stock like legendary confectionery Tootsie Roll could be in trouble. However, while the candy company isn’t carrying tremendous levels of debt, it does have relatively low growth prospects and appears to be overvalued. With a PEG of 3.81 and a P/FCF of 53.49, the stock could be due for a fall.
MGE Energy (MGEE)
MGE Energy, a holding company operating in electric and gas utilities among other segments, has defied any naysayers over the last year, edging up almost 12 percent. However, the company appears to have deeper issues. Its debt/equity ratio of 0.66 is made all the more distressing by a PEG of 4.17 and low projected growth, the company may be due for a fall despite its relatively healthy operating and gross margins.
