The Hershey Company (HSY), Abercrombie & Fitch Co. (ANF): 3 Stocks to Get on Your Watchlist

The other concern here is that the U.S. Department of Agriculture plans to purchase excess sugar from domestic manufacturers to curb the surplus and aid sugar prices. That move could quickly eliminate the margin-boosting benefit The Hershey Company (NYSE:HSY) has been enjoying over the previous year and may cause investor opinion of this expensive stock to sour.

My suggestion: “Kiss” this stock goodbye.

Frontline Ltd. (NYSE:FRO)
Shares of Frontline, a transporter of oil and oil products, as well as coal and iron ore, shot higher earlier this week despite no specific news. Many investors might remember Frontline as a company that paid out a double-digit yield as recently as a few years ago. However, the landscape of the shipping sector has drastically changed, and even at just $2 a share it’s no longer the value it once was.

The biggest concern with Frontline Ltd. (NYSE:FRO) is that it’s levered its balance sheet to the hilt to take advantage of rising oil prices. It seemed like a solid idea at the time, but plenty of other shippers had the same idea. Now, these same shippers are dealing with very low charter rates and often short-term contract lengths because of the uncertainty associated with commodity prices and demand. Frontline, for instance, has $1.3 billion in net debt and has scraped together only $12 million in positive free cash flow over the trailing 12 months — hardly enough to maintain a fleet of commodity-transporting vessels.

Unless oil prices soar or China’s GDP reverses a two-year downtrend, the survival of Frontline could be in serious question. Worse yet, the company has $225 million in convertible bonds that come due in April 2015 that, as of now, it doesn’t have the funds to cover. I would strongly suggest looking into the idea of shorting into any serious strength in Frontline.

The article 3 Stocks to Get on Your Watchlist originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned.

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