As painful as the Budget on 30 October is likely to be, it won’t shake my commitment to investing for the long term. But there are some UK shares that I’m avoiding like the plague, at least based on current form.
Aston Martin Lagonda
I can’t deny that the idea of part-owning a company that produces some of the most beautiful cars on the planet is appealing. Look under the bonnet, however, and Aston Martin Lagonda (LSE: AML) smacks of an old banger. It’s shares have lost 97% of their value in six years, making it one of the worst listings in recent memory.
To be fair, the FTSE 250-listed business has faced huge headwinds. Supply chain issues and high inflation have conspired to reduce sales. With the latter normalising and the new Vanquish V12 due before the end of 2024, perhaps a recovery is on the cards. Even the smallest chink of light could see the share price soar. A Q3 update is due tomorrow (30 October).
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But I think there’s still a lot to worry about. The rapid turnover of CEOs isn’t reassuring. There’s also the truckload of debt to ponder. This raises the possibility that the loss-making company will tap its long-suffering investors for money (again).
Did I mention that it’s gone bust seven times before? If that’s not a bad omen, I don’t know what is.
Ocado
I’m avoiding Ocado (LSE: OCDO) for similar reasons.
Again, I can’t deny that the ‘product’ is impressive. This company’s customer fulfilment centres (CFCs) are a sight to behold, with robots zipping this way and that to fulfil customer orders.
The problem is that this company is valued at £3bn. That’s a big ol’ chunk of cash for something that still doesn’t make a profit. It also means that dividends, if they ever come, are years away.
Again, perhaps there are better times ahead. Revenue has been rising (and losses have been falling) in 2024. There are signs Ocado will become cash flow positive in FY26.
But I’m not sure I have the stomach or the patience to wait for the company to deliver on its partnerships with various retailers.
In the meantime, the balance sheet is creaking like a haunted house floor and all that high-tech wizardry won’t be cheap to maintain.
boohoo
A final share that gives me the heebie-jeebies is fast-fashion firm boohoo (LSE: BOO).
To be fair, I’ve actually owned the stock 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 great growth prospects (further boosted by the acquisition of multiple brands like Debenhams)
Since then, boohoo has gone massively down in my estimation and, it would seem, its target demographic. Questionable corporate governance? Check. A slump in profits? Check. Chinese rival Shein has also grabbed market share.
This month, CEO John Lyttle said he was stepping down. Now, Frasers Group founder Mike Ashley wants the job to prevent further value destruction. It’s all a bit of a bloodbath.
Perhaps the company might surprise us as discretionary spending recovers. Half-year numbers are due on Friday (1 November).
But I won’t be getting involved. Sleepless nights are not what I’m after.
