Factors like slightly eased inflation, a robust job market, and growth in the services sector could drive positive investor sentiment in the market. However, while inflation has declined from the 40-year high in June, it remained elevated. Food and rent prices continue to remain higher.
The uncomfortable inflation level and a red-hot job market could lead to the Fed continuing its aggressive interest rate hikes. Consequently, the economic slowdown could continue. In addition, the escalating U.S.-China tensions over Taiwan might drive significant market volatility in the near term.
Amid the current market scenario, it could be wise to avoid fundamentally weak stocks Carnival Corporation & plc (CCL), Credit Suisse Group AG (CS), Wix.com Ltd. (WIX), HCI Group, Inc. (HCI), Cue Biopharma, Inc. (CUE) as they could witness continued price declines.
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.
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. The net loss amounted to $1.83 billion, while its loss per share stood at $1.61 over the period. The 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 56.3% over the past year.
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 is rated an F grade for Quality and Sentiment and a D for Value. Within the F-rated Travel – Cruises industry, it is ranked #3 of 4 stocks. To see additional POWR Ratings for Growth, Stability, and Momentum for CCL, click here.
Credit Suisse Group AG (CS)
Headquartered in Zurich, Switzerland, CS offers various financial services in Switzerland, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company renders wealth management solutions, including investment advice and discretionary asset management services; risk management solutions, such as managed investment products; and wealth planning, succession planning, and trust services.
For the second quarter of fiscal 2022, net revenues decreased 29% year-over-year to CHF 3.65 billion ($3.85 billion). Its total operating expenses grew 10% from its year-ago value to CHF 4.75 billion ($5.01 billion), while its net loss amounted to CHF 1.59 billion ($1.68billion) compared to a net income of CHF253.00 million ($267.05 million). The company’s loss per share stood at CHF 0.60 compared to an EPS of CHF0.10.
The consensus EPS estimate of $0.57 represents a year-over-year decline of 18.1% for fiscal 2022. The revenue estimate of $3.95 billion represents a decline of 33.7% in the third quarter ending September 2022. The stock has declined 45.6% over the past year.
CS' weak fundamentals are reflected in its POWR Ratings. The stock also has an F grade for Growth and a D for Sentiment. In the B-rated Foreign Banks industry, it is ranked last of 95 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the CS rating for Momentum, Value, Quality, and Stability here.
Wix.com Ltd. (WIX)
Headquartered in Tel Aviv, Israel, WIX develops and markets a cloud-based platform that allows anyone to create a website or web application in North America, Europe, Latin America, Asia, and internationally. The company offers Wix Editor, drag-and-drop visual development and website editing environment platform; Wix ADI, which enables users to create a website for their particular needs; and Corvid by Wix to create websites and web applications.
In the second quarter ending June 30, 2022, WIX’s operating loss increased 4.2% year-over-year to $75.02 million. Its net loss came in at $111.24 million compared to a net income of $37.63 million in the previous period, while its loss per share came in at $1.92 compared to an EPS of $0.60 in the previous period.
The EPS is expected to remain negative in the third quarter ending September 2022. The company's shares have plunged 70.4% over the past year.
WIX’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell. It also has a D grade for Sentiment, Momentum, and Growth. WIX is ranked #17 of 30 stocks in the F-rated Internet - Services industry.
Click here to see the additional POWR Ratings for WIX (Quality, Value, and Stability).
HCI Group, Inc. (HCI)
HCI is involved in property and casualty insurance, reinsurance, real estate, and information technology businesses in Florida. It offers residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs.
In May, HCI announced the pricing of an offering of $150 million in aggregate principal amount of 4.75% convertible senior notes due 2042 in a private placement to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended. HCI also granted the initial purchasers of the notes an option to purchase up to an additional $22.5 million aggregate principal amount.
HCI’s total expenses increased 42.6% year-over-year to $137.49 million for the second quarter ending June 30, 2022. Its net loss came in at $8.54 million compared to a net income of $3.83 million in the previous period, while its loss per share stood at $1.04 compared to an EPS of $0.24 in the prior period.
The stock has declined 48.9% over the past year and 52.9% over the past nine months.
HCI’s weak fundamentals are reflected in its POWR ratings. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The stock has a D grade for Value and Sentiment. In the C-rated Insurance - Property & Casualty industry, it is ranked #50 of 55 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the HCI’s rating for Growth, Stability, Quality, and Momentum here.
Cue Biopharma, Inc. (CUE)
CUE, a clinical-stage biopharmaceutical company, develops biological drugs for the selective modulation of the human immune system to cure various cancers, chronic infectious diseases, and autoimmune disorders.
During the second quarter ending June 30, 2022, CUE’s collaboration revenue declined 99.1% year-over-year to $26.00K. Its loss from operations increased 27.1% from its year-ago value to $13.09 million, while its net loss grew 28.5% from its prior-year quarter to $13.21 million. The company’s loss per share rose 12.1% from its prior-year quarter to $0.37.
Analysts expect CUE’s EPS to remain negative in the third quarter ending September 2022. The revenue estimate of $294.00K represents an 87.7% year-over-year decline. The stock has declined 71.4% year-to-date and 78.2% over the past nine months.
CUE’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D grade, equating to Sell in our proprietary rating system. It also has an F grade for Momentum and a D for Stability. CUE is ranked #99 of 172 stocks in the F-rated Medical - Pharmaceuticals industry.
Click here to see the additional POWR Ratings for CUE (Growth, Quality, Value, and Sentiment).
CCL shares were trading at $10.53 per share on Thursday afternoon, up $0.19 (+1.84%). Year-to-date, CCL has declined -47.66%, versus a -10.98% 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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