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As painful as the October 30 budget is, it will not affect my commitment to long-term investing. But there are some UK stocks that I'm avoiding like the plague, at least based on their current form.
Aston Martin Lagonda
I can't deny that the idea of being part owner of a company that produces some of the most beautiful cars on the planet is attractive. But look under the hood and Aston Martin Lagonda (LSE: AML) smells like an old topic. Its shares have lost 97% of their value in six years, making it one of the worst prices in recent times.
To be fair, the FTSE 250Publicly traded companies have faced enormous difficulties. Supply chain problems and high inflation have conspired to reduce sales. With the latter becoming normal and the new Beat V12 expected before the end of 2024, perhaps a recovery is on the cards. Even the slightest glimmer of light could send the stock price soaring. A third quarter update will be presented tomorrow (October 30).
But I think there is still a lot to worry about. The rapid turnover of CEOs is not reassuring. You also have to consider the large amount of debt. This raises the possibility of the loss-making company turning (again) to its long-suffering investors for money.
Did I mention he's gone bankrupt seven times before? If that's not a bad omen, I don't know what is.
ocado
I am avoiding ocado (LSE: OCDO) for similar reasons.
Again, I can't deny that the “product” is impressive. This company's customer fulfillment centers (CFCs) are a sight to behold, with robots moving back and forth to fulfill customer orders.
The problem is that this company is valued at £3 billion. That's a lot of cash for something that's not yet making a profit. It also means that dividends, if they ever arrive, will be years away.
Once again, perhaps better times are ahead. Revenues have increased (and losses have decreased) in 2024. There are signs that Ocado will be cash flow positive in FY26.
But I'm not sure I have the stomach or patience to wait for the company to deliver on its partnerships with various retailers.
Meanwhile, the balance sheet creaks like the floor of a haunted house and all that high-tech magic won't be cheap to maintain.
boohoo
One last part that gives me chills is the fast fashion brand. boohoo (LSE: BOO).
To be fair, I've owned shares a couple of times over the years, albeit with varying degrees of success. I was initially attracted to the company due to its marketing savvy, strong financial position, and strong growth prospects (further boosted by the acquisition of multiple brands such as Debenhams)
Since then boohoo has gone down massively in my opinion and apparently their target demographic. Questionable corporate governance? Check. A drop in profits? Check. Chinese rival Shein has also gained market share.
This month, chief executive John Lyttle said he would resign. Now, Fraser Group Founder Mike Ashley wants the work to avoid further value destruction. It's quite a bloodbath.
Perhaps the company can surprise us as discretionary spending recovers. Semi-annual figures are due Friday (November 1).
But I won't get involved. Sleepless nights are not what I'm looking for.
