The Fifth Stock That Could Go Bankrupt in 2024

The cable industry is brutal. In this highly competitive world, regional monopolies dominate.

Unless you live completely off the grid, you can probably name the dominant cable company in your market... because you probably only have only one option to begin with. In a market that concentrated, breaking in is a tall order.

And that's the battle Altice (ATUS) has chosen to take on.

Altice operates under the Optimum brand in tough markets like the New York City region, Appalachia, and much of Texas and the southern Mississippi River Valley.

Competing in these markets requires a significant amount of investment. And Altice has financed it through a lot of debt.

Now, that debt could become an existential threat.

Altice has struggled to grow its business as consumers "cut the cord" and turn to streaming. It's also struggling to compete with its large competitors.

Even before debt troubles hit, these pressures had dragged the company's Uniform earnings down from $2.2 billion in 2021 to $1.2 billion last year.

And now, it's looking at a massive debt headwall coming due in the next two years... $2.8 billion out of its $23.9 billion total debt.

That's already far more than its $1 billion market cap.

The company's near-term debt has an interest rate of 5.5%. Assuming it can refinance, it has recently been issuing debt at a rate of 11.25%.

Refinancing at those levels will mean a $160 million hit to pretax profit... for a company with $272 million in pretax profit. That means a potential 59% drop in profits relative to investor expectations.

Altice stock is already down 50% this year. Yet even after this drop, our systems show that it's way overvalued. Its dramatically slowing returns don't do anything for performance, either.

Even after the stock has fallen so much, the market still doesn't fully grasp how bad Altice's issues are. The company's looming credit issues show up in its high-yield credit rating. It may not be able to navigate its debt refinancing needs.

That kind of profit drop will make investors question if the company can even stay in operation... and could send shares tumbling even further.

Regards,

Joel Litman and Rob Spivey
December 5, 2023