The stock markets turned bearish last month, entering correction territory. The S&P 500 index fell 5% last month, thereby registering its worst performance since March 2020. Several socio-economic and geo-political issues brewed, worsening the market environment, which ended January with a colossal sell-off. Because the market is expected to remain volatile, we think it unwise for investors to bet on stocks with a poor outlook, irrespective of their popularity.
Furthermore, despite being overtly popular, certain stocks are significantly overvalued and might suffer price retreats soon. According to BofA Securities’ Savita Subramanian, investors should proceed with caution.
Therefore, we believe popular yet fundamentally weak stocks, Uber Technologies, Inc. (UBER), Carnival Corporation & plc (CCL), DraftKings Inc. (DKNG), and Tilray Brands, Inc. (TLRY), are best avoided now.
Uber Technologies, Inc. (UBER)
San Francisco's UBER develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. It has four segments: Mobility; Delivery; Freight & Advanced Technologies; and Other Technology Programs.
UBER’s revenue came in at $4.84 billion for the third quarter, ended Sept. 30, 2021, up 72.2% year-over-year. However, the company’s net loss was $2.42 billion, versus $1.09 billion in the year-ago period. Moreover, its loss per share was $1.28, compared to $0.62 in the previous period. And its total liabilities came in at $22.6 billion for the period ended Sept. 30, 2021, versus $19.5 billion for the period ended Dec. 31, 2020.
UBER’s 4.55x forward EV/S is 142.4% higher than the 1.88x industry average.
Analysts expect UBER’s EPS to remain negative in fiscal 2022. Over the past month, the stock has declined 7.9% in price to close yesterday’s trading session at $38.61.
UBER’s POWR Ratings reflect its poor prospects. It has an overall D grade, which indicates a Sell. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a D grade for Value, Stability, and Sentiment. Click here to access additional POWR Ratings for UBER (Momentum, Growth, and Quality). UBER is ranked #55 of 80 stocks in the D-Rated Technology - Services industry.
Carnival Corporation & plc (CCL)
Leisure travel company CCL in Miami operates 87 ships that visit approximately 700 ports. The company sells its cruises primarily through travel agents, tour operators, vacation planners, and websites.
CCL’s revenues increased 3,685.3% year-over-year to $1.29 billion for its fourth fiscal quarter, ended Nov. 30, 2021. However, its operating loss came in at $1.89 billion, compared to $1.64 billion for the year-ago period. Also, its net loss was $2.62 billion, compared to $2.22 billion in the previous period. The company’s debt was $33.23 billion for the period ended Nov. 30, 2021, compared to $26.96 billion for the period ended Nov. 30, 2020.
CCL’s 2.97x forward EV/S is 123.8% higher than the 1.33x industry average.
Analysts expect CCL’s EPS to remain negative in 2022. Over the past nine months, the stock has declined 25.1% in price to close yesterday’s trading session at $20.93.
CCL’s POWR Ratings reflect its poor prospects. The stock has an overall F grade, which equates to a Strong Sell in our POWR Ratings system. Also, it has an F grade for Stability, Sentiment, and Quality and a D grade for Value.
We have also rated it for Growth and Momentum. Click here to access all the CCL ratings. It is ranked #2 of 4 in the F-Rated Travel - Cruises industry.
DraftKings Inc. (DKNG)
Boston’s DKNG operates as a digital sports entertainment and gaming company in the United States. It operates through two segments, Business-to-Consumer and Business-to-Business. The company is a multi-channel sports betting and gaming technologies provider, powering sports and gaming entertainment for operators in 17 countries.
For the third quarter, ended Sept. 30, 2021, DKNG’s revenue came in at $212.82 million, up 60.2% year-over-year. However, its loss from operations was $546.52 million, compared to $348.36 million in the year-ago period. Also, its net loss was $545.03 million, compared to $395.66 million, and its loss per share came in at $1.35, compared to $1.11 in the previous period.
DKNG’s 6.24x forward EV/S is 370.7% higher than the 1.33x industry average.
Analysts expect DKNG’s EPS to remain negative in fiscal 2022. Furthermore, its EPS is expected to decline 6.8% per annum for the next five years. It also missed the consensus EPS estimates for each of the four trailing quarters. And over the past month, the stock has declined 13.8% in price to close yesterday’s trading session at $23.68.
DKNG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. In addition, the stock has an F grade for Stability, Sentiment, and Quality and a D grade for Growth and Value.
We also have graded DKNG for Momentum. Click here to access all DKNG’s ratings. DKNG has ranked last in the D-Rated Entertainment - Casinos/Gambling industry.
DKNG is one of the stocks currently in the POWR Charts trading alert service based upon Christian Tharp’s 5 WINNING Stock Chart Patterns
Tilray Brands, Inc. (TLRY)
TLRY researches, cultivates, produces, markets, and distributes medical cannabis products. The Nanaimo, Canada-based company operates through five segments: Cannabis Business; Distribution Business; Beverage Alcohol Business; Wellness Business; and Business Under Development.
TLRY’s net revenue came in at $155.15 million for its fiscal 2022 second quarter, ended Nov. 30, 2021, up 19.8% year-over-year. However, its operating loss was $54.68 million, versus $25.96 million in the year-ago period. Also, its cash and cash equivalents were $331.78 million for the period ended Nov. 30, 2021, compared to $488.47 million, for the period ended May 31, 2021. Its total assets were $5.76 billion compared to $6.03 billion for the same period.
TLRY’s 4.92x forward EV/S is higher than the 4.89x industry average.
TLRY’s EPS is expected to remain negative in both fiscal 2022 and 2023. The stock has fallen 11.5% in price over the past month to close yesterday’s session at $6.22.
TLRY’s POWR Ratings reflect its poor prospects. It has an overall D grade, which indicates a Sell. Also, the stock has an F grade for Momentum and a D grade for Stability and Sentiment.
Click here to access the additional POWR Ratings for TLRY (Growth, Value, and Quality). TLRY is ranked #154 of 181 in the F-Rated Medical - Pharmaceuticals industry.
Click here to checkout our Healthcare Sector Report for 2022
UBER shares were trading at $37.26 per share on Wednesday afternoon, down $1.35 (-3.50%). Year-to-date, UBER has declined -11.14%, versus a -3.59% 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.
Even After January's Sell-Off, Beware of These 4 Ultra-Popular Stocks in February StockNews.com
