4 DOWNGRADED Stocks Not Worth the Risk

The latest POWR Ratings have identified several stocks with negative business or technical momentum. Investors holding these stocks should reassess their positions.

Let’s take a look at four of the latest POWR Rating downgrades: Regency Centers (REG), Douglas Emmett (DEI), Hexcel (HXL), and ViaSat (VSAT).

Regency Centers (REG)

REITs are typically safe, conservative investments. However, when the REIT is dependent on brick-and-mortar retail stores for revenue, there is a reason for concern. If the move toward online shopping were not enough, the pandemic makes things even more challenging for the likes of REG. REG’s portfolio consists of properties leased to shopping centers.

The only potential saving grace is the fact that grocery stores comprise a considerable portion of REG clients. However, the company also leases space to conventional retail stores, restaurants, and others that will likely go under as a second wave of the virus spreads across the land.

The POWR Ratings show REG has "F" grades in the Industry Rank, Buy & Hold Grade, and Trade Grade components. The stock is ranked in the bottom half of the 41 REIT - Retail companies. REG has a year-to-date price return of -41% along with a three-year price return of -36%.

Douglas Emmett (DEI)

DEI’s focus is on acquiring and profiting from office properties and multifamily communities. The company’s properties are high-end, characterized by executive lifestyle amenities. This is not the optimal time to be invested in expensive properties because work is shifting toward the home.

DEI has "F" POWR Rating Buy & Hold Grade and Trade Grade components. DEI is ranked 38th out of 51 stocks in the REITs - Diversified category. The stock has a year-to-date return of -45% along with a three-year return of -36%. Steer clear of DEI until the economy returns to at least a semblance of normal.

Hexcel (HXL)

HXL makes composite materials and reinforcement products for commercial aerospace, space, defense, industrial, and electronics companies. The HXL POWR Ratings are terrible: "F" grades in the Buy & Hold Grade and Trade Grade components. The stock also has a "D" grade in the Industry Rank component. HXL is ranked 49th of 65 stocks in the Air/Defense Services category.

Of the 13 analysts who have studied HXL, one considers it a “Buy”, nine consider it a “Hold” and three-views it as a “Sell”. The grounding of Boeing planes spells bad news for HXL. HXL has a year-to-date price return of -56% along with a three-year price return of -47%.

Making matters worse is the fact that HXL's forward P/E ratio is a sky-high 84.08. Hold off on buying this stock until air travel begins to return to normal.

ViaSat (VSAT)

VSAT makes satellite telecommunications along with wireless networking equipment and signal processing equipment. VSAT customers include the general public, governments, and the military.

VSAT has "F" grades in the POWR Rating components of Buy & Hold and Trade Grade. The stock also has "D" grades in the Industry Rank and Peer Grade categories. Furthermore, VSAT is ranked 50th of 65 publicly traded companies in the Air/Defense Services space. VSAT has a year-to-date price return of -54% and a three-year price-return of -48%.

If Joe Biden is elected, it might spell bad news for the recently formed Space Force, ultimately lowering VSAT's chances for success. At the moment, Biden is a heavy favorite to unseat incumbent Donald Trump. Refrain from investing in VSAT until an election winner is determined. If Biden wins, the only play on VSAT is short.

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