Investing Horror Stories and Zombie Companies

For this Halloween Special, we look back at investments that turned into horror stories and companies going nowhere, like zombies. Make sure you identify what they have in common to avoid the next, and don’t miss the end with some “back from the dead” stocks!

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You’ll Learn

As the name suggests, horror investing stories are the ones we all try to avoid and happen when everything turns bad. Let’s start with one we discussed that illustrates the concept perfectly: Algonquin Power (AQN.TO). How did it go from an investors’ darling to a horror story faster than Freddy shredding its victims?
While we say good things about Dollorama, its US equivalent, Dollar General (DG), appears to be a long agony and torture like we had in the SAW movie. Why is that?
The next one also used to be much appreciated by investors. Walgreens Boots Alliance (WBA) turned into an absolute nightmare. How did it happen?
The last horror investing story we’d like to share today is about a stock you used to own Mike. VF Corporation (VFC) was full of promises. Why does it now seem possessed by unsuccess?
Mike tells us what all these stories have in common so investors can avoid them.
Here’s the informal definition of a zombie: “a person who is or appears lifeless, apathetic, or completely unresponsive to their surroundings.” In other words, zombie companies are ones simply going nowhere. It does not look so good for a company! Altria Group (MO) is a good example, right?
Another company we’ve mentioned a few times that seems to go nowhere is Transcontinental (TCL.B.TO). How is that?
The following two are combined even though they’re entirely different because Mike used to own them. Don’t get infected by Magna International (MG.TO) (MGA) and Andrew Peller (ADW.A.TO).
Even if we all need the car industry, making a real profit is hard! Ford (F) sometimes gives hope but always remains weak.
RioCan REIT (REI.UN.TO) is still popular among dividend investors. So why does it deserve the zombie tag?
Again, what do these companies have in common that could help investors identify them before it’s too late?
We wanted to end with hopeful stories. So here are the “Back from the Dead” companies: 3M (MMM) and Sylogist (SYZ.TO)! What brought them back to life?
Vero points out that Manulife (MFC.TO) (MFC) could fit this category too.
Vero adds that she gets chills thinking that ” back from the dead” companies could lead investors to hold on to their zombies or horror stories for too long. How to draw a line here?