One of the best stocks to short now has already dropped more than 63% since Money Morning Global Credit Strategist Michael Lewitt first warned investors this stock was headed for disaster in December 2014.
But the profit opportunity for investors isn't over. In fact, Lewitt believes this company could go completely bankrupt in 2017.
This company operates in the retail industry, which has seen its fair share of bankruptcies. But the company we're targeting is in much worse shape than the rest of the industry.
The retail industry has been in decline for several years now due to online shopping. PwC did a survey of retail store visits and found that they fell over 50% from 35 billion visits in 2009 to only 17 billion visits in 2013.
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Lewitt has been warning about this company since 2014, citing poor management as the biggest factor weighing on shares. In fact, when the company issued a stock buyback a few years ago at $190 a share, Lewitt said "that was one of the grossest misuses of corporate funds in business history."
One of the best stocks to short in December has already dropped 43% year to date, trading at under $12 a share. But have no fear. Your money-making opportunity has not passed.
Lewitt is so confident that this short pick will continue its free fall that he said, "The truth is, no short portfolio is complete without this train wreck."
Here's one of the best stocks to short now...
Profit Now with One of the Best Stocks to Short
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One of the best stocks to short right now is Sears Holdings Corp. (Nasdaq: SHLD). Lewitt has no faith in Sears' ability to come back from its current slump.
With the Internet taking over because of its ease of use, traditional retail sales have slipped. This shift to e-commerce has been a major roadblock to any Sears stock rally. You see, e-commerce sales accounted for 7% of all retail sales in the United States during the first quarter of 2015. That is almost twice the market share e-commerce had in the first quarter of 2010.
Sears merged with Kmart in November 2004. The merger added $150 million in operating expenses to Sears and, according to Lewitt, "gut the company of its last remaining valuable assets." This was the beginning of the end for Sears.
"The kiss of death in the retail industry," as Lewitt describes it, is when factoring companies who finance inventory revoke financing. Sears has been facing financing revocation from factoring companies since at least 2014.
In a last-ditch effort, hedge fund manager and CEO Eddie Lampert has been selling the company's prime real estate. While this infuses the company with cash, it does little, if anything, to solve the major problems Sears faces.
With cash flow from operations of -$2.2 billion in 2015, it will take more than reducing costs to turn Sears around. This makes it one of the best stocks to short in 2017.
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