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2 FTSE 100 stocks I’ll never buy, even with free money

Young Caucasian man making doubtful face at camera

As a Fool, I’m always optimistic about the performance of the market over the long term. Even so, there are some FTSE 100 stocks that I wouldn’t want to own even if you paid me.

Tough times

It goes without saying that the last few years have been particularly tough for airlines. Following the grounding of flights due to a global pandemic, we now have a cost-of-living crisis squeezing incomes and, consequently, the ability to travel.

I don’t doubt there are better times ahead. However, I very much doubt I’ll ever own a stock like International Consolidated Airlines (LSE: IAG), even if I had free cash to do so.

Now don’t get me wrong — there are things to like here. The company boasts some of the most recognisable brands in the business, including British Airways. And we could see a ‘short squeeze’ if the company releases even a slightly better-than-expected update in the near future.

Debt-laden

But let’s not beat about the bush. Even as weaker airlines fold, the sector will remain hyper-competitive. With fewer people travelling for business, I reckon IAG faces an even greater fight for flyers than before. There are a raft of other issues that all carriers must contend with too, including staffing issues and volatile fuel prices.

Sure, no company’s earnings are completely safe, but I’d much rather own, say, a consumer goods firm where growth isn’t dependent on quite so many factors working in its favour.

On a more fundamental level, IAG now carries a truckload of debt. For this reason, I wouldn’t expect anything significant in terms of dividends for quite a while.

IAG could certainly make me money once the dark economic clouds disperse. Would I want to leave money here with so many other companies on a more solid footing? I don’t think so.

Not on my shopping list

I’ve also been bearish on Ocado (LSE: OCDO) for years now. Up until the beginning of 2021, that looked like an exceptionally bad call. Its stock soared in value as the company penned more contracts with retailers for its impressive logistics tech. Since then however, it’s been a very different story.

Ocado’s share price is down roughly 75% from its record high. That’s severe. But I don’t think it’s unjustified.

Inflation victim

As always, the market has been looking ahead. In addition to increasing costs incurred by the company, the jump in inflation means some shoppers will have switched to cheaper rivals. Worryingly, there could be worse to come with price rises expected to hit 14% in Q4 this year.

More generally, the exodus from growth stocks on concerns over rapid interest rate rises was never likely to leave Ocado unscathed.

Again, it’s not all bad. Ocado could recover strongly when risk appetite returns. It can sometimes be that this year’s most hated shares are next year’s most popular.

Even so, it will take a while before its logistics division contributes to the top line to the same extent as its retail arm. In the meantime, we have an unprofitable company that, again, isn’t about to pay me a dividend.

Given the chance to invest free money, I think I could generate a far better return by looking elsewhere.

The post 2 FTSE 100 stocks I’ll never buy, even with free money appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.