5 Stocks to Avoid Like the Plague

Theres no better time to take a good, hard look at your portfolio than the
beginning of a new year. I know this might not be your first rodeo, and chances
are youve already done at least a little thinking about how your investments
came through 2011, and what youd like to achieve in 2012. If not, theres no time
like the present. Especially when it comes to something I call Ditching the
Dogs, which is a variant of the well-known and very popular Dogs of the Dow.
Youve probably already guessed from the name that Im talking about unloading
those investments that have underperformed, or that are likely to hold your
portfolio back in the next 12 months. Obviously, this is a highly personal
process and every investor is different, but here are five stocks Id avoid like
the plague right now (and the reasons why): Sears Holdings Long a bastion of
American retailing success, Ive been leery of Sears (NASDAQ: SHLD ) for a long
time. In fact, Ive steered clear of it since hedge fund investor Eddie Lampert
used more than a little financial wizardry to create Sears Holdings. At the
time, his goal was to tap into the vast real estate empire underlying Sears and
subsequently Kmart when that company emerged from bankruptcy and he snapped up
shares the stock hit $190 a share in early 2007 on the assumption that it
would. Now, though, its a very different story. With real estate in the toilet
and the value of his collateralized debt circling the drain, he plans to fire
employees, cut more than 120 stores and sell property. Same-store sales are down
sharply as is profitability. Fitch Ratings has cut the companys bond to junk
status, and its likely to have hundreds of millions in writedowns ahead. I think
the company is going to restructure, and net income is going to fall to the tune
of billions when now-litigation conscious accountants have their day. Research
in Motion Once the darling of connectivity and a status symbol for the
cognoscenti, Research In Motion s (NASDAQ: RIMM ) share of the smartphone market
continues to evaporate like fog on a hot morning. I recommended shorting the
company a few years back but was early to the party on several occasions
somehow the stock seemed to fight back. The stock is down over 88% from its peak
of $144.56 in early 2008 and up a creek without a paddle and you know which
creek I am talking about. Dual Chairmen and CEOs Mike Lazardis and Jim Balsillie
who also are co-founders, by the way couldnt fix things, and with Apple s
(NASDAQ: AAPL ) iPhone and Google s (NASDAQ: GOOG ) Android users on the rise, I
dont believe they will. Long-term government contracts prized for their
encryption and steady cash flow are falling by the wayside. Small businesses are
dropping the company like hotcakes because of the constant updating, technical
complexity and brain damage mine included. We switched to Droids more than a
year ago and have never looked back. The technology has simply had its day, and
this is yet one more innovator thats about to head into the sunset. Itll be
lucky to find a buyer.