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Moonshot Medicine: 3 Stocks to Buy to Bet on Long-Shot Drugs

Clinical trials are a difficult and grueling process for companies. The FDA and other regulatory agencies require the highest possible standards in order to approve new drugs. To meet those standards, companies must spend exorbitant sums recruiting patients, testing drugs and cataloging the data. And with most clinical trials ending in failure, all that money may be wasted without generating revenue.

Because of this, it’s no wonder that most drug stocks will seek to use proven methods to treat common diseases. Many of the new drugs coming on the market are small modifications to older drugs. These modifications are useful, often improving treatment or reducing side effects, but they do not radically alter treatment outcomes. But with clinical trials being so expensive, it’s hard to fault drug stocks for being so conservative.

But not every drug stock is content to make minor changes. Many of the best drug stocks to buy are entering bold new territory to create radical new treatments. These treatments are going through clinical trials and could offer a change in patient outcomes. If FDA approval is forthcoming, these new drugs have the potential to upend their market and bring big gains for their investors. The largest gains will come from getting in early before the clinical trials have ended and data is announced.

So, for an investor looking for drug stocks to buy, it’s important to look for both the safe, conservative ones and the big, game-changing ones. Higher rewards often coincide with higher risk, of course. However, the possibility of completely dominating a market with a new treatment should not be overlooked. So here are three of the best long-shot drug stocks to buy.

Acelyrin (SLRN)

Recently, Acelyrin (NASDAQ:SLRN) presented the promising drug, izokibep, that could be a breakthrough in the treatment of psoriatic arthritis. Psoriasis is one of the most common autoimmune disorders. And psoriatic arthritis affects around one-third of psoriasis sufferers. With such a high prevalence, the need for new treatments is acute.

There is currently no cure for psoriatic arthritis, and current treatments are of limited effectiveness in halting or reversing the disease. However, izokibep’s has promise, showing statistically significant efficacy in phase 2 clinical trials. Acelyrin is now continuing with a Phase 2/Phase 3 trial to further prove the drug’s effectiveness. The primary completion date for the trial is January 2024, so news could come out very soon. And if the news is positive, FDA approval may not be far behind.

It should be noted that izokibep has previously failed to prove efficacy in treating a different disease, and the stock fell hard on that news. But that result will have no bearing on the outcome of this clinical trial. And with the stock already depressed by negative sentiment, a positive outcome in the psoriatic arthritis trial could send its price up significantly.

Acelyrin’s most recent earnings report shows them with $556 million in cash and cash equivalents with a net loss of $26 million. The company has more than enough runway to finish its clinical trials and seek FDA approval. While nothing is guaranteed in medicine, if the drug is effective in its current trials, Acelyrin will prove itself one of the best drug stocks to buy today.

Vertex Pharmaceuticals (VRTX)

Acute pain is very difficult to treat. Many current treatments involve habit-forming drugs such as opioids. That has not only contributed to an addiction crisis, but opioids also have harmful side effects even beyond addiction. With so much difficulty in treating acute pain, there is a huge need for new drugs.

Vertex Pharmaceuticals (NASDAQ:VRTX) is poised to bring just that with its groundbreaking non-opioid pain medication, VX-548. VX-548 already showed promise in Phase 2 clinical trials and received Breakthrough Therapy and Fast Track designations as well. By targeting voltage-gated sodium channels that facilitate the sensation of pain in nerve cells, VX-548 can manage pain without the risk of addiction or harmful side effects like respiratory depression and sedation.

Vertex is now running a Phase 3 trial investigating VX-548 for acute pain. And the company is also running multiple trials for its efficacy in specific pain scenarios, such as after surgery or in treating diabetes pain. These trials are all ending in the first half of 2024, and VX-548’s wide-ranging utility could give it a very big market to sell to if it gets approved.

Financially, Vertex has been mostly stable. Its Q2 2023 earnings report showed revenue and earnings at $2.5 billion and $916 million, respectively. That’s up slightly from Q2 2022’s revenue and earnings of $2.2 billion and $811 million, respectively. But to truly go to the next level, Vertex will need a new breakout star. And VX-548 could be it. A powerful, non-addictive pain medication would make Vertex a great drug stock to buy.

AbbVie (ABBV)

Alzheimer’s disease remains a devastating condition with no known cure. Currently, available treatments can only slow the disease’s progression, not reverse or stop it. But AbbVie (NYSE:ABBV) is trialing a new drug which could be a game-changer.

ABBV-552 is a unique anti-Alzheimer drug different from most currently on the market. Many current therapies focus on anti-amyloid beta antibodies, which bind to amyloid beta to help the immune system destroy it. As amyloid beta is believed to play a key role in Alzheimer’s, its destruction should slow the disease. However, these therapies have had limited effectiveness. And because they increase the activity of the immune system, they have shown harmful side effects such as inflammation or bleeding in the brain.

What sets ABBV-552 apart is its mostly unique mechanism of action. This drug aims to enhance the release of neurotransmitters in nerve cells. And since neurotransmitters are how nerves communicate with each other, this enhanced release should facilitate improved nerve cell and brain activity. Unlike antibody-based treatments with their side effects, ABBV-552 appears to have a favorable safety profile. That would be a big relief for patients and doctors who have shied away from antibody-based therapies due to their safety.

ABBV-552 is still undergoing Phase 2 clinical trials, which should finish by June 2024. With a good result, Phase 3 trials could begin not long after. And with still no cure in sight for Alzheimer’s disease, the door is still wide open for the AbbVie treatment to demonstrate success and corner the market. As our population continues to age, diseases like Alzheimer’s will only become more prevalent. The company that can cure such diseases will have the best drug stock you can buy.

On the date of publication, John Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

John Blankenhorn is a neuroscientist at Emory University. He has significant experience in biochemistry, biotechnology and pharmaceutical research.

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Ticking Time Bombs: 3 Manufacturing Stocks to Dump Before the Damage Is Done

Source: Gorodenkoff via Shutterstock

The manufacturing sector is one of the pillars of the global economy, producing goods and services that are essential for various industries and consumers. However, the sector is facing multiple challenges in 2023, as the worsened economic outlook, rising geopolitical risks, and volatility in the energy and commodities markets will put pressure on manufacturers’ performances. This pressure has led to the emergence of manufacturing stocks to sell.

In this deteriorating global context, not all manufacturing stocks are created equal. Some may have strong fundamentals and competitive advantages that can help them weather the storm, while others may be vulnerable to external shocks and internal weaknesses that can erode their value.

Here are three manufacturing stocks that are ticking time bombs in September 2023, and why investors should avoid them.

General Motors (GM)

General Motors (NYSE:GM) is one of the largest automakers in the world but has been in some unflattering headlines recently. On September 15th, the United Auto Workers union simultaneously began striking at GM, Ford (NYSE:F), and Chrysler auto plants. While Ford has made some concessions and a deal seems to be in the works, the strike has only been prolonged at GM plants. In particular, over the weekend, the strike was expanded to include 38 parts distribution centers operated by GM, Jeep, and Ram across 20 different states.

The strike, whether it is prolonged, or the management team ultimately gives into the union’s demands, could have grave consequences for America’s largest automaker. General Motors has been one of the most aggressive players in the electric vehicle space, aiming to sell more than 1 million EVs annually by 2025 and achieve an all-electric portfolio by 2035. However, there are fears that if GM gives into the union and offers substantial wage increases, the automaker could lose its competitiveness to pure-play electric vehicle companies such as Tesla (NASDAQ:TSLA).

These factors could weigh on GM’s stock performance in the coming months, as investors may lose confidence in its ability to overcome its challenges and deliver robust growth. This helps make it one of those manufacturing stocks to sell.

Boeing (BA)

Boeing (NYSE:BA) is a stock that’s been going through a crisis of confidence in terms of its manufacturing capabilities, despite over decades the company has developed itself into a leading manufacturer of commercial and military aircraft, satellites, and rockets. In 2019 and 2020. there were two fatal crashes of its 737 MAX jet in 2019 and 2020.

Although Boeing has resumed deliveries of the 737 MAX after a 20-month grounding, delays in the highly anticipated 737X and 777X programs, which would compete with Airbus’s A320neo and A350, respectively, have come to again tarnish the manufacturer’s reputation. Plaguing Boeing’s 737X program are manufacturing drawbacks concerning improperly drilled holes on the new aircraft.

These delays and manufacturing inadequacies have not only blighted Boeing’s share performance but have also raised the aircraft manufacturer’s forward price-to-earnings ratio to levels well beyond what’s reasonable, which could leave Boeing’s stock at risk of a severe devaluation if things do not turn around quickly.

3M (MMM)

3M Company (NYSE:MMM) is a diversified manufacturer of various industrial products, consumer goods, health care products, and safety equipment. Unfortunately, the manufacturer’s stock has not had a great year thus far. Shares have dramatically plummeted 21.7% since the beginning of the year and have the potential to go down even further as the company continues to face a number of litigations and a genuine slowdown in its organic growth. In 2022, total sales declined 3.2% Y/Y due to lesser-than-expected sales in its consumer-facing end-market and a divestiture related to its Food Safety business. Additionally, in both first and second-quarter earnings reports, revenue came in lower than the same periods in 2022.

Furthermore, controversies from polluting drinking water with toxins to manufacturing earplugs that caused hearing loss for U.S. Army servicemen have led to billions of dollars of litigation costs and lowered earning potential for shareholders. Despite what 3M’s “adjusted” profitability metrics might tell you, the company is not in a good spot these days and further controversies or reduction in revenue could send the stock hurtling to new lows.

On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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Ticking Time Bombs: 3 Dividend Stocks to Dump Before the Damage Is Done

Undoubtedly, investors are getting nervous with ongoing concerns of higher interest rates, inflation, and a weakening economy.

However, one way to improve peace of mind is selling risky dividend stocks. For income investors, a dividend’s security is paramount. It’s time to get rid of these three ticking time bomb dividend stocks before they explode.

Brookfield Renewable Partners L.P. (BEP)

Source: IgorGolovniov / Shutterstock

Brookfield Renewable Partners L.P. (NYSE:BEP) is a broadly diversified renewable power generation firm. Its assets span hydroelectric, wind, solar, distributed generation, pumped storage, cogeneration, and biomass.

While some of these, such as hydroelectric, have excellent economics, other parts of the business stand upon shakier footing. The wind market has convulsed over the past month recently. Specifically, industry leader Orsted (OTCMKTS:DNNGY) plunged in value following a massive write-down of its American offshore wind business.

Then, the situation worsened this week. Fellow renewables company NextEra Energy Partners, LP (NYSE:NEP) abruptly lost a third of its value in two days as management slashed its future growth guidance.

It appears that the Inflation Reduction Act’s subsidies for the wind and solar sectors haven’t quite matched investors’ expectations. Wind and solar are still newer industries that rely on government aid for growth. The current political gridlock in D.C. further limits the future tax breaks that the sector may receive.

After seeing several big renewable energy companies plunge in value over the past month, investors should step aside before the next shoe falls. It’s only a matter of time until analysts question the sustainability of Brookfield Renewable’s dividend and growth plans given the problems its peers are facing.

Boston Properties (BXP)

Source: Ralf Liebhold / Shutterstock

Boston Properties (NYSE:BXP) is a leading office real estate investment trust (REIT).

In prior years, investors could count on office REITs to deliver steady cash flows and strong dividends. However, the pandemic changed everything.

Now, workers have become accustomed to using remote solutions rather than trekking into the office. Even firms that are returning to the office are often doing so for only three or four days per week. All this adds up to falling occupancy rates and lower rents for office buildings.

And Boston Properties faces another problem. It has more than $10 billion in long-term debt. As interest rates continue rising, expect BXP’s annual interest expense to rise by hundreds of millions as it refinances its older lower-cost debt.

Rising expenses combined with falling rental revenue are a toxic combination on a leveraged asset business model such as office REITs. The remote work storm is going to hit the office space hard. Boston Properties’ dividend may not survive at its present size.

Best Buy

Source: Ken Wolter / Shutterstock.com

Best Buy (NYSE:BBY) has surprised investors with its resiliency.

E-commerce has killed off a lot of specialty retailers. Best Buy’s electronics business would seem vulnerable to online competition from Amazon (NASDAQ:AMZN). That’s especially true as online ordering has largely eliminated former Best Buy product categories such as physical CDs, software, and DVD sales.

However, Best Buy’s in-person shopping experience and repair centers have proven useful to shoppers even in the digital age. The firm’s good luck may not last forever, though.

Electronic sales boomed over the past few years as people bought new computers and equipment to study and work from home. Sadly, that demand driver has passed. Now. computer sales are down sharply year over year (YOY).

More broadly, the economy appears to be weakening, and higher inflation is hurting consumers’ spending power. Also, product shrinkage is a mounting issue. Companies like Target (NYSE:TGT) are closing stores to address losses from theft and organized crime.

All of this adds up to a bumpy road ahead for BBY stock as it navigates this challenging environment. The firm may trim the 5.4% dividend yield given these headwinds.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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Dow up 100 points in final hour of trade as 10-year Treasury yield steadies

U.S. stocks were higher Thursday in the final hour of trade, but off the session’s best levels as volatility in the $25 trillion Treasury market continued to be a key focus for investors. The Dow Jones Industrial Average
DJIA,
-0.47%
was up about 107 points, or 0.3%, trading near 33,655, according to FactSet. The S&P 500 index
SPX,
-0.27%
was up 0.6% and the Nasdaq Composite Index
COMP,
+0.14%
was 0.8%, after trading over 1% higher earlier in the session. Longer-dated
TMUBMUSD10Y,
4.579%
Treasury yields were showing signs of stabilizing after shooting higher in recent session after the Federal Reserve indicated rates could stay higher than expected next year, and potentially beyond, while the central bank works to bring inflation down to its 2% yearly target. That has a lot of focus on Friday’s release of the Fed’s preferred inflation gauge, the personal-consumption expenditures price index (PCE) for August. Oil prices
CL.1,
-0.02%
pulled back and technology stocks gained on Thursday, helping to lift equity indexes. The 10-year Treasury yield was off 2 basis points at 4.59%.

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Tesla sued for racial discrimination, retaliation by EEOC

Tesla Inc. was sued Thursday by the U.S. Equal Employment Opportunity Commission, which alleges the EV maker violated federal law by “tolerating widespread and ongoing racial harassment of its Black employees” at its Fremont, Calif., plant, and by retaliating against those opposing the harassment.

Black employees at the Fremont factory, Tesla’s
TSLA,
+1.56%
first assembly plant and for years its only vehicle-manufacturing facility in the U.S., “have routinely endured racial abuse, pervasive stereotyping and hostility” as well as having racial slurs hurled at them, the lawsuit alleges.

“Slurs were used casually and openly in high-traffic areas and at worker hubs,” the EEOC said. Black employees “regularly” saw graffiti with slurs, swastikas, threats and nooses throughout the facility, including on desks, in bathroom stalls and elevators, according to the suit.

Tesla, which disbanded its media relations team during the pandemic, did not immediately return a request for comment. In August, SpaceX, another one of Tesla’s Chief Executive Elon Musk’s companies, was sued by the Justice Department over its hiring practices.

Employees who spoke up against the racial hostility suffered retaliations that included being fired or transferred, the EEOC said.

The lawsuit was filed in the U.S. District Court for the Northern District of California after attempts at reaching a settlement before the litigation. It seeks compensatory and punitive damages as well as back pay for the affected workers. It also seeks changes to Tesla’s employment practices to prevent discrimination in the future, the EEOC said.

A Black Tesla employee was awarded $137 million in 2021 by a jury that agreed he was subjected to racial harassment at the Fremont factory, but in April 2022 a judge reduced the award to $15 million.

Shares of Tesla have doubled so far this year, compared with an advance of around 12% for the S&P 500 index
SPX.

The first Model S rolled out of the Fremont factory in 2012, and the plant now makes Model S, Model 3, Model X and Model Y vehicles, with capacity to make more than a million vehicles a year as well as energy products and battery cells.

Tesla opened up its second U.S. vehicle-making factory in the Austin, Texas, area in the spring of 2022.

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U.S. stocks book back-to-back gains as Treasury yields retreat

U.S. stocks finished higher on Thursday, with the S&P 500 notching back-to-back gains for the first time in two weeks, as the upward march of Treasury yields relented. The S&P 500
SPX,
-0.27%
gained 25.21 points, or 0.6%, to 4,299.72, the biggest gain since Sept. 14, according to preliminary closing data from FactSet. The Nasdaq Composite
COMP,
+0.14%
gained 108.43 points, or 0.8%, to 13,201.28. The Dow Jones Industrial Average
DJIA,
-0.47%
rose by 116.07 points, or 0.4%, to 33,666.34. Despite their gains, all three indexes remain on track to finish the week lower. In the bond market, the yield on the 10-year Treasury note
TMUBMUSD10Y,
4.579%
slipped 2.9 basis points to 4.596%. Bond yields move inversely to prices. However, it remained near its highest level since 2007. Rising Treasury yields, particularly on the long end of the curve, have rattled stocks in September, sending the S&P 500 down 4.6% for the month as of Thursday’s close.

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Novo Integrated stock more than doubles after hours on $1 billion collateral agreement

Novo Integrated Sciences Inc.
NVOS,
+48.36%
shares more than doubled in the extended session Thursday after the tiny healthcare company said it or entered a $1 billion funding agreement for the next 15 years. Novo Integrated shares soared as much as 155% after hours, following a 15.4% decline to close at 20 cents, giving the company a market capitalization of $31.8 million at the end of the trading day. The company, which takes a decentralized approach to healthcare, said it signed a $1 billion master collateral agreement with Blacksheep Trust, which the company said is expected “in one or more transactions during the current fiscal quarter following the validation and authentication by third-party audit procedures.”

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Dow falls 160 points Friday, S&P 500 posts worst monthly drop since December

Stocks closed mostly lower on Friday, with the S&P 500 cementing its biggest drop in a month since December, as a surge in bond yields knocked the wind out of this year’s rally in equities. The Dow Jones Industrial Average
DJIA,
-0.47%
fell about 157 points, or 0.5%, ending near 33,508, according to preliminary FactSet data. The S&P 500 index
SPX,
-0.27%
shed 0.3% and the Nasdaq Composite index
COMP,
+0.14%
gained 0.1%. September was the worst month for the Dow since February, with its 3.5% loss, while the S&P 500 shed 4.9% and the Nasdaq lost 5.8%, marking their worst months since December 2022, according to Dow Jones Market Data. Yearly core inflation edged higher in August, according to Friday’s release of the latest PCE price index. The focus over the weekend will likely be a U.S. government shutdown. Given the negative backdrop for markets, the S&P 500, Dow and Nasdaq all booked declines in the third quarter.

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Don’t Miss the Boom: 3 Retail Stocks Set to Explode Higher

Right now, retail is undergoing a major shakeup. Consumer shopping habits have changed, perhaps permanently. As a result, quite a few retail stocks have been punished too much, seeing their stock prices plummet over the past few months. That might strike fear into some investors, but all I see right now is opportunity. While there will be more volatility ahead, the long-term growth trajectory for these stocks looks exceedingly bright.

You may have heard it a thousand times already, but the best time to buy is when everyone else is selling. That’s especially true when these investors are considering blue-chip giants. I see massive upside potential in several retail stocks right now. Hold them for the long-term, and let the power of compounding go to work. Five years from now, you’ll be very glad you loaded up at these discounted prices.

Dollar General (DG)

Shares of Dollar General (NYSE:DG) have tumbled 55% over the past year, a selloff I believe is way overdone. The discount retailer has hit some speed bumps lately, including supply chain disruptions, inventory gluts, and cautious lower-income shoppers. However, I don’t see the justification for Dollar General’s valuation getting slashed in half.

This is a well-run company with a great track record. While sales and earnings may slow in the near-term, Dollar General has overcome challenges before and emerged stronger. Once it right-sizes its inventory and works through temporary headwinds, I expect earnings per share growth to accelerate again. The company still sees a massive opportunity to expand its store base, especially in underserved rural markets.

With the stock trading at just 14-times forward earnings, I believe much of the bad news is already baked in. Dollar General’s brand and value proposition remains rock-solid among its core low-income shopper base. The long-term opportunity here is simply stellar.

Walgreens Boots Alliance (WBA)

Another retail stock that has plunged recently is Walgreens Boots Alliance (NASDAQ:WBA). Shares cratered 43% in 2023 and have traded at their lowest levels since 1988. While the pharmacy giant faces challenges, I don’t foresee its stock lingering at these depressed levels for long.

Undoubtedly, Walgreens faces reimbursement pressure and post-COVID headwinds to vaccinations and testing revenue. Its international retail chain, Boots, has also struggled amidst a weak U.K. economy, but seems to be recovering. However, Walgreens has levers to pull to improve profitability, including cost control and accelerating healthcare services growth. The company also pays an attractive 9% dividend yield at current levels. I don’t expect the dividends to stay at this level, but at 5.3-times forward earnings ratio, WBA stock is too compelling to ignore.

Plus, the company’s strategic shift toward healthcare offers big upside potential over the long term as pharmacy and healthcare delivery become more integrated. I believe it is better to take advantage of the negativity by buying Walgreens stock at this huge discount.

Burlington Stores (BURL)

Off-price apparel retailer Burlington Stores (NYSE:BURL) hasn’t been spared from Wall Street’s selloff. Its stock sits 62% down from its peak. While weaker discretionary spending among low-income shoppers has pressured sales and earnings, I contend the market has oversold this name.

No question, it may take some time for Burlington’s core customers to get fully back on their feet. However, the company has levers to pull to drive better performance. Burlington’s Q2 results showed sequential improvement, and its merchant team continues to source compelling off-price deals.

Trading at just 23-times earnings, BURL stock it is a little more expensive. However, the company’s revenue growth is nearly 10%. Thus, once macro conditions stabilize, the company’s solid value proposition and opportunistic buying approach should lead to a strong recovery.

On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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3 Stocks to Avoid With Oil Prices Near 10-Month Highs

The price of West Texas Intermediate oil has retreated slightly from its recent high of $91.48, which was the most elevated price for the commodity since November 2022. As of the morning of Sept. 26, WTI oil was changing hands around $88.67. At that high level, oil prices hurt many companies, including airlines and cruise operators, both of which use a great deal of fuel derived from oil. And with airline ticket prices rising, consumers travel less, hurting other companies that cater to tourists. Finally, some automakers will be hurt by higher oil prices, while the profits of companies that sell products that are made with large amounts of oil, such as paint and plastics, will also take a significant hit. Here are three stocks to avoid until oil prices retreat much further.

Royal Caribbean (RCL)

Since cruise operators use so much fuel to power their huge ships over long distances, they often add surcharges to passengers’ tickets when oil prices get very high. Alternatively, the cruise operators’ profits sink significantly amid elevated oil prices.

Of course, both of these scenarios will be very negative for Royal Caribbean (NYSE:RCL), one of the leading names in the sector. In the first case, RCL will have to raise prices, causing demand for its cruises to sink. And with many consumers already getting tired of “revenge travel” and still being negatively impacted by elevated inflation, the resulting decrease in its demand could be very large indeed. In the second scenario, its bottom line will be lowered meaningfully.

Both of these situations, of course, would be negative for RCL. Also worth noting is that the cruise operator had a massive $21 billion pile of debt as of the end of last quarter. If RCL’s profits drop due to high oil prices, it may have to sell more of its shares to pay back its debt, putting significant downward pressure on its shares.

Akzo Nobel (AKZOY)

Last year, CNBC explained that “Paint companies… use a significant amount of petroleum-based raw materials.” and “The price of crude oil is directly proportional to the cost of paint manufacturing.”

Given these points, it’s logical to assume that Akzo Nobel (OTCMKTS:AKZOY), one of the leading paint manufacturers, will be hurt by the current high oil prices, making it one of the stocks to avoid at this time.

Moreover, Akzo Nobel is likely being significantly hurt by the relatively low number of housing starts in the U.S. and by fragile economic growth in Europe.

Indeed, in the first half of this year, its revenue was flat versus the first half of 2022, as its sales volumes dropped 2%. However, higher prices and lower costs enabled its operating income to rise 5% year-over-year.

But higher oil prices will likely push its operating income down significantly this quarter.

Hawaiian Holdings (HA)

Since Hawaii is far from most other regions, most of Hawaii Holdings’ (NASDAQ:HA) flights use large amounts of oil. As a result, the company’s profit margins are likely to be more negatively impacted than those of many of its peers by high oil prices.

Moreover, I recently heard HA’s CEO, Peter Ingram, told CNBC that the airlines continue to be negatively affected by the tragic fires in Maui.

In addition, Bank of America recently issued a pessimistic note about the airline sector in general, citing high fuel costs and potentially reduced “pricing power” as demand wanes amid higher supply and less powerful demand trends.

Given all of these points, HA is definitely one of the stocks to avoid at this point.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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Acelyrin (SLRN)

Vertex Pharmaceuticals (VRTX)

AbbVie (ABBV)

General Motors (GM)

Boeing (BA)

3M (MMM)

Brookfield Renewable Partners L.P. (BEP)

Boston Properties (BXP)

Best Buy

Dollar General (DG)

Walgreens Boots Alliance (WBA)

Burlington Stores (BURL)

Royal Caribbean (RCL)

Akzo Nobel (AKZOY)

Hawaiian Holdings (HA)

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