3 Stocks That Investors Should Avoid

Editors' pick: Originally published Nov. 25.

There wasn't much movement in the major market indices a day before the long Thanksgiving weekend began. 

The Nasdaq fell slightly. The New York Stock Exchange, S&P 500 Index and Dow Jones Industrial Average rose a tick or two. 

Amidst the relative calm, the stocks of three companies that are well known in their industries had big gyrations. Deere & Company (DE) , GameStop  (GME) and Urban Outfitters (URBN) could point to some good news, but all have faced major challenges in recent months and longer. 

They're worth a look, but in the end, investors should place their money elsewhere.

Deere & Company

Shares of Deere & Company, the maker of John Deere tractors and other heavy farm machinery, rose more than 11% in Wednesday trading after the company released its earnings. Despite profits falling 17% in the quarter, the company posted earnings per share of $0.90, down from $1.08 per share a year ago but well above analysts' estimates of just $0.40 per share. 

Revenue from equipment fell 5% during the quarter down to $5.65 billion, but that was still better than the $5.38 billion Wall Street was expecting. This quarter also represented the end of Deere's fiscal year, for which it posted revenue of $24.1 billion and earnings per share of $4.81, both figures easily beating the $23.17 billion in revenue and $4.32 per share earnings analysts had been expecting.

A weak market due to low commodity prices has Deere's management pessimistic about the future. The company believes earnings will fall from $1.52 billion this year to just $1.4 billion in 2017 as sales will continue to decline by around 1%.

Deere appears to be dealing with weak demand well and investors liked what they heard earlier this week. But an economic crisis could have an outsized impact on Deere and investors. Stay on the sidelines and watch things play out while focusing on more recession proof businesses.

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