Debt bombs defused at Macy's, American Apparel

Filed under: Competitive strategy, Sirius Satellite Radio (SIRI), Stocks to Sell, Recession

In my Top 10 Stocks to Avoid in 2009, I suggested that investors stay away from stocks impacted by a handful of specific themes that will play out during the coming year.

Stocks impacted by higher fuel prices, a stronger U.S. dollar, and high defaults in the credit card space should be investment afterthoughts in 2009.

One theme that did not make the list, and probably should have, are companies with so-called debt bombs set to go off at some point during the next year. There are many businesses that have big debts coming due in 2009.

With the credit markets in disarray, the likelihood of obtaining new loans to replace old debt is difficult at best. As such, companies must obtain concessions from bond holders or run the risk of going into default. Whatever scenario plays out, the result is likely to be negative for common shareholders. With so much risk, it makes little sense to venture into stocks with these issues outstanding.

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Debt bombs defused at Macy's, American Apparel originally appeared on BloggingStocks on Sat, 20 Dec 2008 13:10:00 EST. Please see our terms for use of feeds.

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