2 poorly rated stocks to avoid until further notice
The stock market has been booming since the beginning of this year due to macroeconomic and geopolitical headwinds. While benchmarks rallied strongly in July on the back of better-than-expected corporate earnings and favorable economic data, the market outlook once again looks bleak. July’s searing jobs report raised concerns about persistently high inflation, which could affect the Fed’s upcoming interest rate hikes.
According BofA’s Michael Hartnett, “the stock market is on course to hit new lows later this year after the July jobs report, as inflation is likely to persist and the Fed will be forced to continue to tighten financial conditions. ” Hartnett expects the S&P 500 to trade below 3,600, which represents a potential decline of 13% from the current level.
Given that the macroeconomic environment is expected to remain challenging, it might be wise to avoid fundamentally weak stocks Coinbase Global, Inc. (PIECE OF MONEY) and Roku, Inc. (ROKU). These stocks are rated Strong Sell or Sell in our own POWR Rankings system.
Coinbase Global, Inc. (PIECE OF MONEY)
COIN is a fintech company that provides end-to-end cost-effective infrastructure and technology. The company offers the crypto-economy’s leading financial account for retailers, a marketplace with a pool of liquidity to transact crypto assets for institutions, and technologies and services that enable ecosystem partners build crypto-based applications and securely accept crypto-asset payments. .
On July 21, 2022, the SEC announced insider trading fee against former COIN employee Ishan Wahi, accusing him of leaking information to his brother Nikhil Wahi and his friend Sameer Ramani that COIN listed at least 25 crypto assets for trading on its platform.
COIN net revenue for the fiscal second quarter ended June 30, 2022 decreased 63.7% year-over-year to $808.32 million. Its total operating expenses rose 36.9% year over year to $1.85 billion.
The company’s net loss was $1.09 billion, compared to net profit of $1.61 billion a year ago. Additionally, its loss per share was $4.98, compared to EPS of $6.42 a year ago.
Analysts expect COIN PES is expected to remain negative for fiscal 2022. Its revenue for the quarter ending September 30, 2022 is expected to decline 38.5% year-over-year to $806.05 million. Over the past nine months, the stock has lost 75.5% to close the last trading session at $87.68.
COIN’s weak fundamentals are reflected in its POWR ratings. It has an overall rating of D, which equates to a sale in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F rating for growth, stability and sentiment and a D for value. It is ranked No. 134 out of 153 stocks in the F rating Software app industry. Click here to see COIN’s other ratings for Momentum and Quality.
Roku, Inc. (ROKU)
ROKU operates a TV streaming platform through two segments: platform and player. Its platform allows users to discover and access various streaming content and content publishers to build and monetize large audiences. ROKU’s streaming players and TV-related audio devices are available through direct retail sales and licensing agreements with service operators.
For the fiscal second quarter ended June 30, 2022, ROKU’s operating loss was $110.51 million, compared to operating profit of $69.08 million. The company’s net loss was $112.32 million, compared to a net profit of $73.47 million the previous year.
Additionally, its loss per share was $0.82, compared to EPS of $0.52 a year ago. Additionally, its Adjusted EBITDA loss was $12.07 million, compared to an Adjusted EBITDA of $122.43 million in the same period last year.
Analysts expect ROKU’s EPS for fiscal 2022 to remain negative. The stock has lost 80.4% over the past year to close the last trading session at $78.10.
ROKU’s POWR ratings are consistent with this grim outlook. It has an overall F rating, which equates to a strong sell in our proprietary rating system.
It has an F rating for growth, stability and sentiment and a D for value. Within the Consumer goods industry, it is ranked #55 out of 59 stocks. To see ROKU’s other ratings for Momentum and Quality, Click here.
COIN shares were trading at $89.41 per share on Wednesday morning, up $1.73 (+1.97%). Year-to-date, COIN is down -64.57%, compared to a -11.41% rise in the benchmark S&P 500 over the same period.
About the Author: Shweta Kumari
Shweta’s deep 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 informed investment decisions. After…