4 ultra-popular stocks to avoid like the plague in the fourth quarter
As the market braces for the last week of a volatile September, major stock indexes remain bullish, recovering from the massive selloffs seen earlier this month. According to data compiled by Johns Hopkins University, COVID-19 cases in the United States averaged around 120,000 per day over the past week, compared to a seven-day average of over 166,000 cases. early September. This, along with the statement by Pfizer CEO Albert Bourla that the United States could return to normal within a year, has prompted investor optimism about the economic recovery.
Given that investors remain bullish as the Fed has decided to continue supporting the economy for now and COVID-19 cases are on the decline, the stock market is likely to continue its bull run. However, not all stocks are good bets at this time. Several ultra-popular stocks have risen significantly over the past two months without possessing any fundamental strength. Their poor financial health could cause their stock prices to drop sharply in the short term.
SoFi Technologies (SOFI), Camber Energy Inc. (CEI), Northern Dynasty Minerals Ltd (NAK) and ReWalk Robotics Ltd. (RWLK) are three such stocks that have gained momentum due to their popularity among retail traders. However, given their low growth potential and poor fundamentals, these stocks are best avoided now.
SoFi Technologies (SOFI)
SOFI, a financial company, operates an online platform that provides financial services. Ready; Financial services; and Technology platforms are the three operational segments of the company. The company offers a wide range of services including student loan refinancing, personal loans, auto loan refinancing, home loans, mortgages, and insurance products for renters, homeowners, automobiles, and more. .
For the second quarter ended June 30, 2021, SOFI recorded a net loss of $ 165.31 million, compared to net income of $ 7.81 million in the previous year quarter. Its loss per share increased significantly from a year ago to $ 0.48, while its cash and cash equivalents declined 47.1% year-on-year to $ 461.92 million. In addition, the company’s free cash flow from operating activities decreased 79.1% from last year’s value to $ 82.61 million.
Analysts expect its EPS to remain negative in fiscal 2021. While the stock has gained 26.1% in the past month, it is down 15.5% in the past three months. .
SOFI’s POWR ratings are consistent with this grim outlook. The stock has an overall rating of F, which translates into a strong sell rating in our proprietary rating system. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
SOFI has an F rating for value and sentiment, and a D for growth and stability. Within the financial services industry (business) ranked D, it is ranked 101st out of 103 stocks. To see additional ratings for quality and momentum, click here.
Camber Energy Inc. (IEC)
CEI is an independent oil and gas company that acquires, develops and sells crude oil, natural gas and natural gas liquids (NGLs) in Texas. As of March 31, 2020, its estimated total proven reserves were 133,442 million barrels of oil equivalent, including 54,850 barrels of crude oil reserves, 43,955 barrels of NGL reserves and 207,823 million cubic feet of gas reserves. natural.
In May, NYSE American informed CEI that it was not complying with the exchange’s continuous listing standards, as discussed in section 1007 of the NYSE American Company Guide due to its inability to timely file its Form 10-K. for the nine-month period ended December 31. 2020.
CEI’s revenue decreased 38.1% year-on-year to $ 57.46 million in the second quarter ended September 30, 2020. Its operating loss amounted to $ 827.64 million during the year. this period. The company’s net loss jumped 642.5% from a year ago to $ 2.06 billion, while its loss per share was $ 0.19 during of this period.
The poor outlook for CEI is also reflected in its POWR ratings. The stock has an overall rating of F, which equates to a strong sell rating in our proprietary rating system. CEI also has an F rating for value, quality and stability. Of 91 stocks in the energy industry – oil and gas ranked C, CEI is ranked last.
Click here to see the additional notes for CEI (Growth, Momentum and Sentiment).
Northern Dynasty Minerals Ltd (NAK)
NAK is a mining exploration company. Its principal mining property is the Pebble copper-gold-molybdenum project in southwest Alaska, consisting of 2,402 mineral claims covering approximately 417 square miles.
During the second quarter ended June 30, 2021, NAK’s operating loss was $ 9.03 million. The company reported a net loss of $ 9.22 million, while its loss per share was $ 0.02 over that period. In addition, the company’s net cash used in operating activities was $ 16.03 million.
The company’s EPS is expected to remain negative during the current year. Although NAK has gained 59.7% year-to-date, it is down 47.6% in the past year. In addition, the share price has fallen 15.1% in the past six months.
NAK’s weak fundamentals are reflected in its POWR ratings. The stock has an overall rating of F, which equates to a strong sell rating in our POWR rating system. The stock also has an F rating for value, momentum, and quality. In industry classified D – Metals, it is ranked 36th out of 37 stocks.
In addition to the POWR ratings I just outlined, you can see NAK’s ratings for Growth, Stability, and Sentiment here.
ReWalk Robotics Ltd. (RWLK)
RWLK is a medical device company engaged in the design, development and marketing of portable robotic exoskeletons for people with mobility issues or other medical issues in Israel, USA, Europe, Asia- Pacific, Latin America and Africa. It advertises and sells its products to third party payers, institutions and individuals directly and through distributors.
RWLK’s revenue decreased 139% year-on-year to $ 1.44 million in the second quarter ended June 30, 2021. Its operating loss increased 23% from the value of the company. last year to reach $ 3.14 million. The company’s net loss rose 10% from a year ago quarter to $ 3.14 million, while its loss per share jumped 68.2% year-on-year to $ 0.07 .
TTCF’s EPS is expected to remain negative in fiscal 2021. While the stock has returned 64% in the past year, it has fallen 12.6% in the past six months.
RWLK’s POWR ratings are consistent with this grim outlook. The stock has an overall rating of D, which equates to a sell rating in our proprietary rating system. The stock also has a D rating for stability, quality and value. RWLK is ranked 149th out of 180 stocks in the Medical sector – Devices and equipment classified C.
Beyond the POWR ratings I just outlined, you can see RWLK’s ratings for value, momentum, and growth here.
Click here to view our health sector report for 2021
SOFI shares were trading at $ 17.15 a share on Tuesday afternoon, down $ 0.55 (-3.11%). Since the start of the year, SOFI has gained 37.86%, compared to 17.31% for the benchmark S&P 500 during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. Following…