5 Stocks You Need to Sell Before Q4
Market volatility is widespread ahead of the Fed's September rate hike. Moreover, experts are wary of the near-term market uncertainties. Given this volatile backdrop, it could be wise to avoid...
Market volatility is widespread ahead of the Fed's September rate hike. Moreover, experts are wary of the near-term market uncertainties. Given this volatile backdrop, it could be wise to avoid fundamentally weak stocks NIO (NIO), Twitter (TWTR), Lucid Group (LCID), DraftKings (DKNG), and AMC Entertainment (AMC). Keep reading….
Market volatility is rife amid lingering macro headwinds, as is evident from the CBOE Volatility Index's 58.4% year-to-date gains. Moreover, the Fed is expected to announce another rate hike in September. Atlanta Federal Reserve Bank President Raphael is supporting a 50 bps hike in September to a 3.5%-3.8% total rate range by the end of 2022.
In addition, John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said, "Volatility will continue because there's enough uncertainty out there to justify it."
Todd Jones, chief investment officer at wealth management firm Gratus Capital, added, "It's probably going to be sharp up-and-down moves within a pretty well-established range."
Given the volatile market circumstances, it could be wise to avoid fundamentally weak stocks NIO Inc. (NIO), Twitter, Inc. (TWTR), Lucid Group, Inc. (LCID), DraftKings Inc. (DKNG), and AMC Entertainment Holdings, Inc. (AMC) now.
NIO Inc. (NIO)
Headquartered in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles in China. It offers five, six, and seven-seater electric SUVs, as well as smart electric sedans.
NIO's total revenues came in at RMB9.91 billion ($1.43 billion) for the first quarter ended March 31, 2022, up 24.2% year-over-year. However, its loss from operations came in at RMB2.19 billion ($316.26 million), up 639.7% year-over-year. Its non-GAAP net loss came in at RMB1.31 billion ($189.23 million), up 269.3% year-over-year.
NIO's EPS is expected to decline 142.9% year-over-year to a negative $0.17 for the yet-to-be-reported quarter ended June 2022. Over the past year, the stock has lost 47.9% to close the last trading session at $19.92.
NIO's POWR Ratings reflect its poor prospects. It has an overall grade of F, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an F grade for Growth and Quality and a D for Value and Stability. Click here to access the additional POWR Ratings for NIO (Momentum and Sentiment). NIO is ranked #50 out of 65 stocks in the D-rated Auto & Vehicle Manufacturers industry.
Twitter, Inc. (TWTR)
TWTR operates as a platform for public self-expression and conversation in real time. The company's primary product is Twitter, a platform that allows users to consume, create, distribute, and discover content.
On August 24, 2022, Rosenblatt analyst Barton Crockett downgraded TWTR to neutral. After a complaint from Peiter Zatko, a well-known hacker from TWTR, more analysts have downgraded the stock.
For the second quarter ended June 30, 2022, TWTR's revenue came in at $1.18 billion, down marginally year-over-year. Its net loss came in at $270.01 million, compared to an income of $65.65 million in the year-ago period, while its loss per share came in at $0.35, compared to an EPS of $0.08 in the prior-year period.
TWTR's revenue is expected to decrease marginally year-over-year to $1.56 billion for the quarter ended December 2022. Over the past year, the stock has lost 35.4% to close the last trading session at $40.46.
TWTR's POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. In addition, the stock has an F grade for Sentiment and a D for Momentum.
Lucid Group, Inc. (LCID)
Technology and automotive company LCID develops electric vehicle (EV) technologies. The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
On August 4, 2022, Citigroup lowered its price target on LCID from $36.00 to $28.00.
LCID's loss from operations came in at $559.20 million for the second quarter ended June 30, 2022, up 124.7% year-over-year. Its net loss came in at $555.27 million, up 112.2% year-over-year. Moreover, its net cash provided by financing activities came in at $4.09 million, down 95.9% year-over-year.
LCID's EPS is expected to remain negative in 2022 and 2023. Its EPS is expected to decline 69.4% per annum for the next five years. The stock has lost 57.3% year-to-date to close the last trading session at $16.24.
LCID has an overall F grade, translating to Strong Sell in our proprietary rating system. Also, the stock has an F grade for Value, Stability, and Quality.
Click here to access the additional POWR Ratings for LCID (Growth, Momentum, and Sentiment). It is ranked #53 out of 65 stocks in the Auto & Vehicle Manufacturers industry.
DraftKings Inc. (DKNG)
DKNG operates a digital sports entertainment and gaming company. It offers multi-channel sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries.
DKNG's cash and cash equivalents came in at $1.51 billion for the period ended June 30, 2022, compared to $2.15 billion for the period ended December 31, 2021. Its total current assets came in at $2.14 billion compared to $2.75 billion for the same period.
Street expects DKNG's EPS to remain negative in 2022 and 2023. Also, its EPS is estimated to fall 6.8% per annum for the next five years. Over the past year, the stock has lost 71.4% to close the last trading session at $16.53.
DKNG has an overall D rating, equating to Sell in our POWR Ratings system. It has an F grade for Stability and a D for Value and Quality. Click here for additional DKNG ratings (Growth, Momentum, Sentiment). DKNG is ranked #27 out of 28 stocks in the D-rated Entertainment - Casinos/Gambling industry.
AMC Entertainment Holdings, Inc. (AMC)
AMC and its subsidiaries engage in the theatrical exhibition business. The company owns, operates, or has interests in theaters in the United States and Europe and currently runs around 950 theaters and 10,600 screens.
AMC's total revenues came in at $1.17 billion for the second quarter ended June 30, 2022, up 162.3% year-over-year. However, its operating costs and expenses came in at $1.18 billion, up 59.5% year-over-year. Also, its net cash used in investing activities came in at a negative $48 million compared to $13.50 million in the previous period.
Street expects AMC's EPS to remain negative in 2022 and 2023. Its EPS is expected to decline by 217% per annum for the next five years. Over the past year, the stock has lost 77.3% to close the last trading session at $9.17.
AMC has an overall D grade, equating to Sell in our POWR Ratings system. Also, it has an F grade for Stability and a D for Sentiment.
NIO shares were trading at $19.83 per share on Monday morning, down $0.09 (-0.45%). Year-to-date, NIO has declined -37.41%, versus a -14.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate