In the last week where the Dow Jones Industrial Index rose by over 1,200 points only to fall afterward for a few more sessions, investors should avoid speculative plays.
The implosion of cannabis stocks, which we’ve anticipated for months, is accelerating. Markets have no appetite buying companies that promise future profitability but never get there.
The same logic of avoiding speculative technology stocks applies.
BlackBerry (TSX:BB) traded at multi-year lows as a result of markets selling companies unlikely to show growth. BlackBerry’s pivoting into mobile device management, secure connected IoT, and AI-based threat and malware detection are not paying off. CEO John Chen tried, for many years, to reignite growth through acquisitions.
BlackBerry has falling cash balances on hand and has little cash flow growth from the new initiatives. Selling BlackBerry, for now, would make sense for investors unwilling to wait longer.
Himax Technology (NASDAQ: HIMX) posted a surprisingly strong quarterly report that sent the stock to over $5.00. Yet a one-quarter rebound is not enough proof that the business recovered.
Himax embarked on many expensive ventures that did not pan out. Its 3D sensing collaboration with Qualcomm (NASDAQ:QCOM) has yet to win many contract deals with Android phone manufacturers.
Investors should wait for Himax stock to re-test yearly lows, ahead of the next earnings report, instead of holding it.