It has been a challenging year for investors as all major indexes have declined significantly due to macroeconomic and geopolitical headwinds. The Federal Reserve has tried to tame stubborn inflation by raising interest rates aggressively, but there are no signs of the inflation cooling off.
The September consumer price index (CPI) rose 0.4% over the previous quarter and 8.2% from the year-ago period. The sequential inflation increase was higher than analyst estimates. The persistently high inflation strengthens the case for the Fed to raise interest rates by another three-quarters of a percentage point in its November meeting.
Michelle Meyer, the chief U.S. economist at the Mastercard Economics Institute, said, “The more inflation comes in above expectations, the more they’re going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy.”
As the central bank continues its rate hikes, many economists believe the economy is poised to enter a recession by next year.
Considering the weak market sentiments, we think it could be wise to avoid fundamentally weak stocks Snowflake Inc. (SNOW), Credit Suisse Group AG (CS), Riot Blockchain, Inc. (RIOT), and Bed Bath & Beyond Inc. (BBBY).
Snowflake Inc. (SNOW)
SNOW is a global provider of cloud-based data platforms. The company’s platform offers a Data Cloud, which allows customers to consolidate data into a single source and is used by various organizations across industries.
SNOW’s net loss widened 17.5% year-over-year to $222.81 million for the second quarter ended July 31, 2022. The company’s loss per share widened 9.4% year-over-year to $0.70. In addition, its total operating expenses increased 45.2% year-over-year to $531.75 million.
Analysts expect SNOW’s EPS for the quarter ending January 31, 2023, to decline 61.6% year-over-year to $0.05. The stock has fallen 53.9% year-to-date to close the last trading session at $156.25.
SNOW’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D grade for Value, Momentum, Stability, and Quality. It is ranked #69 out of 78 stocks in the D-rated Technology Services industry. Click here to see the other ratings of SNOW for Growth and Sentiment.
Credit Suisse Group AG (CS)
CS is a financial services company based in Zurich, Switzerland. The company’s segments include Swiss Universal Bank, International Wealth Management, Asia Pacific, Global Markets, Investment Banking & Capital Markets, Strategic Resolution Unit, and Corporate Center. It offers a range of private banking and wealth management solutions. It offers a range of investment advice and discretionary asset management services.
On October 11, 2022, Bloomberg reported that the U.S. Justice Department was investigating CS for continuing to help its U.S. clients, particularly those with South American passports, hide assets from authorities eight years after it paid $2.60 billion in a tax evasion settlement.
For the fiscal second quarter ended June 30, 2022, CS’ net revenue declined 28.6% year-over-year to CHF3.64 billion ($3.64 billion). The company’s total operating expenses increased 10% year-over-year to CHF4.75 billion ($4.75 billion).
In addition, its net interest income declined 15.6% year-over-year to CHF1.19 billion ($1.19 billion). Also, its net loss came in at CHF1.59 billion ($1.59 billion), compared to a net income of CHF253 million ($253 million) in the year-ago period.
For the quarter ended September 30, 2022, CS’ revenue is expected to decline 36.9% year-over-year to $3.76 billion. Over the past nine months, the stock has declined 56.9% to close the last trading session at $4.53.
CS’ POWR Ratings are consistent with this bleak outlook. It has an overall D rating, which translates to a Sell in our proprietary rating system.
It has a D grade for Growth and Sentiment. Within the Foreign Banks industry, it is ranked #94 out of 98 stocks. Click here to see CS' other ratings for Value, Momentum, Stability, and Quality.
Riot Blockchain, Inc. (RIOT)
RIOT is involved in cryptocurrency mining and the overall blockchain system through various investments. The company has deployed approximately 8,000 application-specific integrated circuit miners at its cryptocurrency mining facility in Oklahoma. In addition, its subsidiary Tess Inc. seeks to develop a blockchain-based escrow service for wholesale telecom carriers.
For the fiscal second quarter ended June 30, 2022, RIOT’s net loss came in at $366.33 million, compared to a net income of $19.33 million. Its adjusted EBITDA loss came in at $65.17 million, compared to an adjusted EBITDA of $2.38 million. The company’s adjusted loss per share came in at $0.50, compared to an adjusted EPS of $0.03.
For the current quarter, RIOT’s EPS is expected to remain negative. It failed to surpass Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 75% to close the last trading session at $6.39.
RIOT’s weak prospects are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Stability, Sentiment, and Quality and a D for Value and Momentum. It is ranked #77 out of 78 stocks in the D-rated Technology – Services industry. Click here to see the RIOT’s rating for Growth.
Bed Bath & Beyond Inc. (BBBY)
BBBY operates as a retail store chain. The company sells domestic merchandise, bath items, kitchen textiles, and home furnishings.
In October, Moody’s lowered the retailer’s corporate-family rating from Caa2 to Ca. In addition, its probability of default rating was downgraded from Caa2-PD to Ca-PD, and its senior unsecured notes from Caa3 to C. The rating change to Ca indicates that BBBY will likely default over the next twelve months.
BBBY’s net sales declined 28% year-over-year to $1.43 billion for the second quarter that ended August 27, 2022. Its gross margin came in at 27.7%, compared to 30.3% in the year-ago period. The company’s adjusted EBITDA loss came in at $168 million, compared to an adjusted EBITDA of $85 million.
In addition, its non-GAAP net loss came in at $256 million, compared to a non-GAAP net income of $4 million in the year-ago period. In addition, its adjusted loss per share came in at $3.22, compared to an adjusted EPS of $0.04.
Analysts expect BBBY’s EPS for the quarter ending November 30, 2022, to remain negative. Its revenue for the current quarter is expected to decline 23.4% year-over-year to $1.44 billion. It failed to surpass the consensus EPS estimates in each of the trailing four quarters. The stock has declined 64.7% year-to-date to close the last trading session at $5.15.
BBBY’s POWR Ratings reflect this weak outlook. It has an overall F rating, which translates to a Strong Sell in our proprietary rating system. It is ranked #57 out of 61 stocks within the Home Improvement & Goods industry.
It has an F grade for Stability and Sentiment and a D for Quality. To see the other ratings of BBBY for Growth, Value, and Momentum, click here.
SNOW shares were trading at $154.00 per share on Friday afternoon, down $2.25 (-1.44%). Year-to-date, SNOW has declined -54.54%, versus a -23.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
4 Stocks to Sell Before the End of 2022 StockNews.com
