We keep an eye out for companies that are truly struggling and may be headed for disaster. Stocks on are watch list are typically losing money, filing for bankruptcy or fighting to survive. We urge investors to do their homework when a company reaches this stage. Dean Foods is more of a sector issue than a lone stock problem, but it serves to make the point.
Dean Foods is a national producer of milk, dairy products, ice cream, juices, and teas based in Dallas, Texas. Dean Foods has reported a drop of more than a third of its stock price, claiming that low retail price points for grocery private-label milk has made it hard for the company to make a profit. Its national brand, DairyPure, is typically priced higher than in-store brands, leading to lower sales. A decrease in milk demand is also hurting sales, suggesting that the company’s stock problems will continue for the foreseeable future.
Rating: Things are going bad fast