The July CPI data showed a decline in inflation from the multi-decade high level. This, along with a robust job market and improved consumer sentiment, has driven the benchmark indexes higher over the past few days.
However, the current level of inflation could prompt further interest rate hikes as it remains elevated. According to Wharton professor Jeremy Siegel, the second half of 2022 seems favorable for the U.S. stock market, but it will drop to the lows set in June if the Federal Reserve decides to raise interest rates to 4% or higher.
Roubini, an Iranian American economist, said, "The recession is going to be long, protracted, severe, and associated with financial distress across the board." Also, the tensions between China and Taiwan could further affect the market’s prospects.
Since the market is expected to remain volatile, it could be wise to avoid fundamentally weak stocks AMC Entertainment Holdings, Inc. (AMC), Carnival Corporation & plc (CCL), SoFi Technologies, Inc. (SOFI), and Shopify Inc. (SHOP), which are trading at high volume with the return of the meme craze.
AMC Entertainment Holdings, Inc. (AMC)
AMC, along with its subsidiaries, engages in the theatrical exhibition business. The company owns, operates, or has interests in theaters in the United States and Europe. As of March 1, 2022, it operated approximately 950 theaters and 10,600 screens. The company is headquartered in Leawood, Kansas. It has traded at an average volume of 46,726,345 over the past three months.
During the second quarter ending June 30, 2022, AMC's operating loss amounted to $16.10 million. Its net loss came in at $121.60 million, while its adjusted loss per share amounted to $0.20. The company’s net cash used in operating activities amounted to $76.60 million for the quarter ending June 30, 2022.
AMC's EPS is expected to remain negative in the third quarter ending September 2022. The stock has plunged 30.5% over the past year and 41.8% over the past nine months.
AMC's POWR Ratings are consistent with this bleak outlook. The company's overall D rating translates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AMC has an F grade for Stability and a D for Value and Sentiment. Within the F-rated Entertainment - Movies/Studios industry, it is ranked #7 of 7 stocks.
To see additional POWR Ratings for Momentum, Growth, and Quality for AMC, click here.
Carnival Corporation & plc (CCL)
CCL functions as a leisure travel company. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard brand names. It has traded at an average volume of 54,741,832 over the past three months.
Last month, CCL announced that it closed its previously announced underwritten public offering of 102,139,621 shares of common stock of the company at a public offering price of $9.95 per share.
The company expects to use the net proceeds from the offering for general corporate purposes, which could include addressing 2023 debt maturities. This will lead to dilution of shares, impacting the current shareholder ownership interest.
For the second quarter ending May 31, 2022, CCL’s operating loss came in at $1.47 billion. Its net loss amounted to $1.83 billion, while its loss per share stood at $1.61 for the quarter. Net cash used in operating activities stood at $1.21 billion for six months ended May 31, 2022.
Analysts expect CCL's EPS to remain negative in the third quarter ending August 2022. The company's shares have plunged 50.9% over the past year and 52% over the past month.
CCL's POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, which translates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CCL has an F grade for Stability and Sentiment and a D for Value. Within the F-rated Travel – Cruises industry, it is ranked #2 of 4 stocks.
To see additional POWR Ratings for Growth, Quality, and Momentum for CCL, click here.
SoFi Technologies, Inc. (SOFI)
Headquartered in San Francisco, California, SOFI offers digital financial services. It has three operational segments: Lending, Technology Platform, and Financial Services. The company's financial services and products permit its members to borrow, save, spend, invest, and protect their money. SOFI has traded at an average volume of 37,431,372 over the past three months.
For the second quarter ending June 30, 2022, SOFI’s total noninterest expenses increased 15.5% year-over-year to $458.24 million, while its net loss amounted to $95.84 million, while its loss per share came in at $0.14. The company’s net cash used in operating activities stood at $1.96 billion compared to net cash provided by operating activities of $82.61 million.
SOFI's EPS is expected to remain negative in the third quarter ending September 2022. The company's shares have declined 52.1% year-to-date and 65% over the past nine months.
SOFI's poor prospects are also apparent in its POWR Ratings. The stock has an overall F grade, equating to a Strong Sell in our proprietary rating system. It also has an F grade for Stability and Quality and a D for Value. SOFI is ranked #104 of 106 stocks in the F-rated Financial Services (Enterprise) industry.
Click here to see the additional POWR Ratings for SOFI (Growth, Sentiment, and Momentum).
Shopify Inc. (SHOP)
Headquartered in Ottawa, Canada, SHOP provides an e-commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company's platform permits merchants to display, manage, market, and sell its products through various sales channels. It has traded at an average volume of 36,733,400 over the past three months.
In the second quarter ending June 30, 2022, SHOP’s loss from operations came in at $190.21 million compared to an income of $139.44 million in the prior-year quarter. Its net loss came in at $1.20 billion compared to a net income of $879.09 billion in the year-ago period, while its loss per share came in at $0.95 compared to an EPS of $0.69 a year ago.
The company’s EPS is expected to remain negative in the third quarter ending September 2022. The stock has plunged 73.4% over the past year and 76.4% over the past nine months.
SHOP's poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. It has a D grade for Sentiment, Stability, and Growth. SHOP is #29 of 30 stocks in the F-rated Internet - Services industry.
Click here to see the additional POWR Ratings for SHOP (Quality, Value, and Momentum).
AMC shares were trading at $23.98 per share on Wednesday morning, down $0.83 (-3.35%). Year-to-date, AMC has declined -11.84%, versus a -9.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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