Though we have seen a significant recovery in the stock market from the March 23rd lows, there are a number of stocks whose businesses have been affected by the weakened economy due the novel coronavirus.
As a result, their stock prices are well off their 52-week highs and are showing no signs of rallying in the near future.
This week, four well-known stocks, Bank of America (BAC), Coca-Cola Company (KO), Consolidated Edison, Inc. (ED) and TD Ameritrade Holding Corporation (AMTD), were downgraded by our exclusive POWR Ratings system to either “Sell” or “Strong sell”.
Let’s take a look at each of these four downgraded companies to understand why their businesses are suffering:
Bank of America (BAC)
After the coronavirus spread throughout the world at the end of February of this year, almost all stocks were negatively impacted. However, since March 23rd, many have seen a remarkable recovery. Some even eclipsing their 52-week highs.
Yet there are some industries that are still suffering. The banking industry is one of them. That is because the Federal Reserve dropped the Fed Funds Rate to almost zero and they plan to to keep these rates low for a considerable amount of time.
In addition, last week the Fed put restrictions on bank dividends after their test found some banks could be stressed in pandemic.
As a result, it’s not surprising that the POWR Ratings system has an Overall Rating of “D” for BAC. Bank of America’s stock also has a Trade Grade of “F” and an Industry Rank of “D” in the POWR Ratings system.
Coca-Cola Company (KO)
KO has witnessed a decline in demand since the onset of the coronvirus. People aren’t going to the movies, to watch sporting events, or restaurants. All places that people usually enjoy Coca-Cola products.
As a result, in the past 6 months shares of KO are down about 18%.
Though the company has a solid balance sheet, with significant cash reserves, there path forward to any significant growth is unclear as the coronavirus continues to spread throughout the world.
So it’s not surprising to see that stock has an overall rating of “D” in the POWR Ratings system. And a Trade Grade of “F”.
Consolidated Edison (ED)
Consolidated Energy is a utility company that has been negatively affected in the past couple of quarters. Shares of the company are down about 19% year-to-date. That is because overall electricity demand is down due to sheltering in place because of the coronavirus and not going out to their offices, bars, restaurants, stories, etc.
Presently, 35 states in the US are seeing an increase in coronvirus cases. Which means that this trend is likely to continue throughout 2020.
ED’s POWR Rating is a “D,” which is Sell. And the Trade Grade component of POWR Ratings has the stock graded as a “F.”
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BAC shares rose $0.01 (+0.04%) in after-hours trading Wednesday. Year-to-date, BAC has declined -33.07%, versus a -2.53% rise in the benchmark S&P 500 index during the same period.
About the Author: StockNews Staff
The StockNews Staff is led by a team of investment experts including CEO, Steve Reitmeister and trading legend Adam Mesh. The goal of our commentary is to provide you with valuable insights to make more successful investment decisions.
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