Barron's: "More Zombie Companies Have Cropped Up During the Pandemic. Why Concerns Are Overblown."

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Barron's: "More Zombie Companies Have Cropped Up During the Pandemic. Why Concerns Are Overblown."

Excerpt from Barron’s quoting DataTrek Research:

…. “The issue of zombies companies isn’t new, however. The International Monetary Fund, in a report cited by Yardeni Research, feared in October 2019 that zombie companies’ debt could soon rise to $19 trillion, or 40% of all corporate debt in major economies. The percentage of all global public companies that are zombies has risen to almost 16% currently from 4% in 1980, according to DataTrek Research. The firm says that 85% of zombie companies globally will remain in the category a year from now, compared with 75% in 2015….

….“The lesson for value investors: Zombies don’t tend to fully recover, so while deep cyclical stocks should work fine just remember they are more trade than investment,” DataTrek said”….

Read the full article here on Barron’s!