5 Stocks to Sell Before Things Get Even Uglier

The consumer price index (CPI) rose 8.3% year-over-year and 0.1% over the prior month in August. Increased prices of food, shelter, and medical care services more than offset a sharp decline in gasoline prices. The stock market tanked following yesterday’s hotter-than-expected inflation data. All three major benchmark indexes logged their worst day since June 2020.

Matt Peron, director of research at Janus Henderson Investors, said, “The CPI report was an unequivocal negative for equity markets. The hotter than expected report means we will get continued pressure from Fed policy via rate hikes.”

The stubbornly high inflation strengthens the case for the Fed to increase interest rates by at least 75 basis points next week. Kathy Bostjancic, the chief U.S. economist at Oxford Economics, believes that the economy is poised to enter a ‘mild recession’ in the first half of next year.

Considering the weak market sentiment, we think it could be wise to sell fundamentally weak stocks Lucid Group, Inc. (LCID), Plug Power Inc. (PLUG), AMC Entertainment Holdings, Inc. (AMC), Peloton Interactive, Inc. (PTON), and Bed Bath & Beyond Inc. (BBBY) before the situation gets worse.

Lucid Group, Inc. (LCID)

LCID uses its equipment and factory to design, develop, manufacture and sell electric vehicles, EV powertrains, and battery systems in-house.

For the fiscal second quarter ended June 30, 2022, LCID’s loss from operations widened 124.6% year-over-year to $559.20 million. Its total costs and expenses increased 163.6% year-over-year to $656.53 million. The company’s net loss and net loss per share narrowed 15.8% and 95.4% year-over-year to $220.42 million and $0.33, respectively. Also, its adjusted EBITDA loss came in at $414.08 million, up 89.9% from the prior-year value.

Analysts expect the company’s EPS to remain negative in fiscal 2022. The stock has slumped 58.9% over the past nine months and 57.7% year-to-date to close the last trading session at $16.10.

LCID’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong 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 an F grade for Value, Stability, and Quality. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #53 of 65 stocks. Click here to see the other ratings of LCID for Growth, Momentum, and Sentiment.

Plug Power Inc. (PLUG)

PLUG is a leading provider of comprehensive hydrogen fuel cell (HFC) turnkey solutions. The company offers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, the stationary power market, and more. In addition, it manufactures and sells fuel cell products to replace batteries and diesel generators in stationary backup power applications.

During the second quarter that ended June 30, 2022, PLUG’s total operating expenses increased 131.9% year-over-year to $114.44 million. The company’s operating and net losses widened 63.9% and 73.9% from the year-ago value to $146.91 million and $173.29 million, respectively. Also, its loss per share came in at $0.30, widening 66.7% year-over-year.

Analysts expect PLUG’s EPS to be negative for fiscal 2022. It has failed to surpass the consensus EPS estimates in each of the trailing four quarters. The stock has declined 10.3% over the past nine months to close the last trading session at $28.91.

PLUG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.

It has an F grade for Stability, Sentiment, and Quality and a D for Growth and Value. Within the Industrial – Equipment industry, it is ranked #87 of 90 stocks. To see the PLUG’s rating for Momentum, click here.

AMC Entertainment Holdings, Inc. (AMC)

AMC is a leading theatrical exhibition company that delivers distinctive and movie-going experiences. The company owns, operates, and has interests in theaters in the United States and internationally. It operates more than 950 theaters and 10,600 screens.

In the second quarter that ended June 30, 2022, AMC’s operating costs and expenses increased 59.5% year-over-year to $1.18 billion. Its operating loss and net loss narrowed 94.6% and 64.6% from their year-ago values to $16.10 million and $121.60 million, respectively. Also, AMC’s adjusted loss per share came in at $0.20, narrowing 71.8% year-over-year.

Analysts expect AMC’s EPS for fiscal 2022 to remain negative. Its EPS is expected to decrease 217% per annum over the next five years. The stock has lost 81.2% over the past year to close the last trading session at $9.72.

AMC’s poor prospects are also apparent in its POWR Ratings. It has an overall rating of D, equating to a Sell in our proprietary rating system. It has an F grade for Stability and Sentiment. In the F-rated Entertainment - Movies/Studios industry, it is ranked #6 out of 7 stocks.

Beyond what I’ve stated above, we have also given AMC grades for Growth, Value, Momentum, and Quality. Get all AMC ratings here.

Peloton Interactive, Inc. (PTON)

PTON offers interactive fitness products through two segments: Connected Fitness Products and Subscription. It sells connected fitness products with touchscreens that stream live and on-demand classes under the brand names Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+.

PTON’s total revenue decreased 27.6% year-over-year to $678.70 million for the fourth quarter ended June 30, 2022. Its operating loss widened 298.6% from the prior-year quarter to $1.20 billion. The company’s net loss came in at $1.24 billion, widening 297.3% year-over-year. Its loss per share stood at $3.68, up 250.5% year-over-year.

Street expects PTON’s revenues to decline 20.6% year-over-year to $639.10 million in the first quarter ending September 30, 2022. Its EPS is expected to decrease by 76.5% per annum over the next five years and remain negative in the current year. Over the past year, the stock has declined 91.1% to close the last trading session at $9.91.

PTON’s POWR Ratings are consistent with this bleak outlook. The stock's overall F rating translates to a Strong Sell in our proprietary rating system.

It has an F grade for Sentiment and Quality and a D for Value and Stability. Among the 58 stocks in the Consumer Goods industry, it is ranked #56. To see additional ratings of PTON for Growth and Momentum, click here.

Bed Bath & Beyond Inc. (BBBY)

BBBY is an omnichannel retailer offering a range of domestic merchandise such as bed linens, bath items, kitchen textiles, home furnishing items, and various juvenile products. The company sells its products through its website and under ten brands: Bee & Willow, Marmalade, Nestwell, Haven, Simply Essential, Our Table, Wild Sage, Squared Away, Studio 3B, and H for Happy.

In the fiscal first quarter that ended May 28, 2022, BBBY’s net sales decreased 25% year-over-year to $1.46 billion. Its gross profit declined 44.9% year-over-year to $349.31 million, while its operating loss widened 371.9% from the year-ago value to $339.16 million. BBBY’s adjusted net loss came in at $225.23 million, compared to an adjusted net income of $4.93 million in the year-ago period.

Also, its adjusted EBITDA loss came in at $223.54 million, compared to an adjusted EBITDA of $86.07 million in the same quarter last year. The company’s adjusted net loss per share amounted to $0.92, compared to an EPS of $0.05 in the prior-year period.

Analysts expect BBBY's estimated loss per share to be $1.80 for the quarter ended August 31, 2022. Its consensus revenue estimate is expected to decline 22.7% year-over-year to $1.45 billion in the to-be-reported quarter. BBBY has missed the consensus EPS estimates in three of the trailing four quarters.

BBBY has declined 65.4% over the past year to close the last trading session at $8.37.

BBBY's POWR Ratings reflect its poor prospects. The stock has an overall rating of D, which translates to Sell in our proprietary rating system. It has an F grade for Stability and Sentiment and a D for Growth and Momentum. It is ranked #57 of 63 stocks in the Home Improvement & Goods industry.

Click here to see the other ratings of BBBY for Value and Quality.

LCID shares were trading at $16.61 per share on Wednesday afternoon, up $0.51 (+3.17%). Year-to-date, LCID has declined -56.35%, versus a -16.63% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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