The Fed’s incessant rate hikes to tame the sky-high inflation and the recent financial sector turmoil have taken a toll on investor sentiments. Amid soaring recessionary concerns, let us explore stocks trading under $1, Advent Technologies Holdings, Inc. (ADN), AEye, Inc. (LIDR), and Kidpik Corp. (PIK).
The Fed’s interest rate hikes had their intended effect on inflation, which declined from the peak of 9.1 to 5% in March 2023. However, core inflation increased by 0.4% and 5.6% year-over-year. Since inflation is well above the Fed’s target of 2%, experts anticipate further rate hikes.
Coupled with the banking turmoil, the Fed’s persistent rate hikes are feared to tip the economy into a recession. Also, with retail sales declining for the second straight month in March 2023 and the manufacturing output dipping, fears of an economic slump were exacerbated.
Gregory Daco, the chief economist at EY Parthenon, commented, “I think it’s increasingly likely we’ll end up with some form of recession. We’re seeing more and more evidence of a slowdown in economic activity.” Moreover, the Fed’s staff economists expect a “mild recession” later this year.
Considering the current market dynamics, it could be wise to avoid fundamentally weak and beaten-down stocks ADN, LIDR, and PIK now.
Advent Technologies Holdings, Inc. (ADN)
ADN, an advanced materials and technology development company, operates in the fuel cell and hydrogen technology markets. It develops, manufactures, and assembles fuel cell systems and critical components that determine the performance of hydrogen fuel cells and other energy systems.
ADN’s trailing-12-month gross profit margin of negative 9.49% compares to the 29.9% industry average. Likewise, its trailing-12-month ROCE and ROTC of negative 76.50% and 29.60% compare to the industry averages of 13.67% and 7.05%, respectively.
ADN’s net revenue declined 32.6% year-over-year to $1.96 million in the fiscal fourth quarter that ended December 31, 2022. Its gross loss was $498 thousand for the same quarter, compared to the gross profit of $159 thousand in the year-ago quarter that ended December 31, 2021.
Its operating loss widened by 200.6% from the prior-year period to $50.08 million. Also, its net loss and net loss per share increased 428.8% and 411.1% year-over-year to $47.63 million and $0.92, respectively.
Analysts expect ADN’s revenue and EPS to come in at $52.34 million and negative $0.53 for the fiscal year ending December 2023.
ADN’s shares have plunged 64.1% over the past year and 59% over the past six months to close the last trading session at $0.84.
ADN’s poor prospects are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ADN also has a D grade for Growth and Stability and an F for Quality. It is ranked #80 of 89 stocks in the Industrial – Equipment industry.
To see the additional POWR Ratings for Value, Momentum, and Sentiment for ADN, click here.
AEye, Inc. (LIDR)
LIDR provides lidar systems for vehicle autonomy, advanced driver-assistance systems, and robotic vision applications in the United States, Europe, and Asia. It offers 4Sight A, a software-configurable lidar solution for automotive markets, and 4Sight M, a software-configurable lidar solution for the mobility and industrial markets.
LIDR’s trailing-12-month gross profit margin of negative 139.43% compares to the 50.54% industry average. Likewise, its trailing-12-month ROCE and ROTC of negative 75.14% and 42.52% compare to the industry averages of 1.96% and 1.97%, respectively.
For the fiscal fourth quarter that ended December 31, 2022, LIDR’s total revenue declined 39.5% year-over-year to $1.09 million. Its loss from operations and gross loss widened by 1.9% and 583.4% year-over-year to $23.98 million and $2.02 million. The company’s net loss and net loss per share for the same quarter stood at $23.74 million and $0.15, respectively.
Analysts expect LIDR’s EPS to decline 19.2% year-over-year to negative $0.56 for the fiscal year ending December 2023. Its revenue for the same year is expected to come in at $10.60 million.
The stock has lost 95.1% over the past year and 73.6% over the past six months to close the last trading session at $0.24.
LIDR’s POWR Ratings reflect this bleak outlook. It has an overall rating of D, which translates to Sell in our proprietary rating system.
It has a D grade for Value, Stability, and Quality. It is ranked #77 in the Industrial – Equipment industry.
Click here to see LIDR’s Growth, Momentum, and Sentiment rating.
Kidpik Corp. (PIK)
PIK operates as a subscription-based e-commerce company that sells kids’ apparel, footwear, and accessories. The company serves its customers through its retail websites, www.kidpik.com and shop.kidpik.com; third-party websites; and clothing subscription boxes.
PIK’s trailing-12-month ROTC of negative 30.37% compares to the 6.35% industry average. Likewise, its trailing-12-month EBIT and EBITDA margin of negative 47.48% and 47.31% compare to the industry averages of 7.77% and 11.43%, respectively.
PIK’s net revenues decreased 10% year-over-year to $4.74 million for the fiscal quarter that ended December 31, 2022. Its operating loss stood at $1.77 million, up 2.1% year-over-year. Its net loss for the same quarter stood at $1.79 million, while its loss per share came in at $0.23.
In addition, its total current assets stood at $14.61 million as of December 31, 2022, compared to $22.11 million as of January 1, 2022.
Analysts expect PIK’s EPS for the fiscal year ending December 2023 to come in at negative $0.83. Its revenue for the same period is expected to come in at $19.17 million. Moreover, PIK failed to surpass consensus revenue estimates in three of the trailing four quarters.
The stock has declined 76.80% over the past year and 53.6% over the past six months to close the last trading session at $0.65.
PIK’s poor prospects are reflected in the POWR Ratings. It has an overall F rating, which equates to a Strong Sell in our POWR Ratings system.
PIK is also rated an F for Stability and a D for Growth, Value, and Quality. Of the 61 stocks in the D-rated Internet industry, PIK is ranked #60.
Beyond what we have mentioned above, one can see additional POWR Ratings for Sentiment and Momentum for PIK here.
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ADN shares were trading at $0.85 per share on Monday morning, up $0.01 (+1.19%). Year-to-date, ADN has declined -53.04%, versus a 8.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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