As the stock market rallies impressively despite the global economic conditions brought by the ongoing COVID-19 pandemic and the brewing trade wars between the US and China, investors are putting their bets in with little to no worry about their portfolio. However, the months-long lockdown and the back-and-forth tariff war between two of the economically largest countries are bound to impact the prevailing bullish trend. Here are three stocks to be cautious of right now:
The automotive/energy giant is enjoying a seemingly unstoppable rally, with the company’s YTD stock price jumping from around $450 up to $1,300 in early July. While the future for renewable energy and smart self-driving cars remain promising, one cannot overlook the company’s looming debt crisis, which is currently at $13 billion on the books. Even the slightest financial pressure can lead to this debt collapsing the company’s operations.
Once a giant in its respective industry, Gamestop is one of the many companies that got slowly phased out by digitalization. With the gaming community now opting for games they can easily download from the comforts of their own home, fewer people are going to their local Gamestop location to buy products. The company’s stock price has plummeted by 1,000 percent since 2015 from around $46 to $4 per share. Gamestop’s survival will depend on how well they adapt to the new market. The company still has a large amount of real estate that they can utilize to stay afloat in the meantime.
Bio-Key International Inc (BKYI)
A lesser-known stock that’s included in the list is of Bio-Key International Inc., a fingerprint biometric firm that designs and manufactures cutting-edge fingerprint biometric ID systems. While the most recent financials look positive, with the company’s operating income growing by over 7 percent, revenue and return on equity remain lower than last year’s report. And while the stock’s price is appealing, currently at $0.75 per share, there simply aren’t enough major catalysts to move the stock to its original price levels a year or two ago.
There are a lot more stocks out there that investors should be wary of loading upon. In times of uncertainty, it is best to stay liquid and wait for major news events that show a clear and decisive direction.