I took a look at three stocks to avoid last week, predicting that Blink Charging (BLNK -0.86%), Nikola (NKLA -3.23%), and Jumia (JMIA -2.22%) were in for a rough week. I held up pretty well.
- Blink Charging tumbled 15% on the week. The operator of charging stations for electric vehicles had a huge rally last month along with other EV-related investments. Gravity kicked in this time for the volatile stock.
- Nikola took an even bigger hit than Blink Charging, with its weekly plunge of 32%. A big change in terms with its high-profile partner and its post-IPO lockup expiration rocked the shares.
- Jumia cratered 15% for the week. The African e-commerce specialist was another stock that had a strong November bleed into a wave of selling last week.
The three stocks averaged a nearly 21% decline for the week. They all suffered double-digit percentage losses, a sharp contrast to the S&P 500's comparable gain of 1.7% for the week.
For this week, I see Blink Charging, Stitch Fix (SFIX -4.44%), and Booking Holdings (BKNG -0.43%) as vulnerable investments in the near term. Here's why I think these are three stocks to avoid this week.
Image source: Getty Images.
Blink Charging
I'm back to the Blink Charging well this week. The stock may have tumbled nearly 15% on an otherwise buoyant trading week, but the stock remains one of the more irrationally overpriced investments out there.
Electric vehicles will continue to grow in popularity, but this doesn't mean that Blink Charging will be a leader in pay-to-charge parking kiosks. Despite all of the speculative buzz this is still a company with just $4.5 million in trailing revenue, and no near-term shot at turning a profit. Blink Charging hasn't earned the $773 million market cap it commands heading into the new trading week.
Blink Charging knows how to craft promising press releases detailing its plans to consolidate in big cities, but this market will ultimately be commoditized. No matter how big you think the market may be for premium charging in the future I can guarantee you're either overplaying Blink Charging's competitive strengths here or overestimating the number of car owners that will be paying a lot to charge an eco-friendly automobile.
Stitch Fix
The pandemic hasn't been kind to Stitch Fix, and understandably so. With so many retailers going out of business no one wants to pay full price for clothing. With folks spending more time at home they don't need as many stylist-coordinated outfits as they used to before.
The bullish argument for Stitch Fix is that it held up considerably better during the lull than expected. Revenue only declined 9% in its fiscal third quarter ending in early May. Revenue bounced back with a 2% increase in its fiscal fourth quarter. This week it's hoping to build on that with accelerating top-line growth.
Analysts are bracing for a third consecutive quarterly loss in Monday afternoon's report, but they do see revenue inching 8% higher for the period. The long-term potential of Stitch Fix is strong, but a lot of the recovery has been discounted by a stock that has more than tripled since bottoming out in March.
Booking Holdings
There were more than 1,250 stocks hitting new 52-week highs on the major U.S. stock exchanges last week, and I'm a bit surprised to see the leading online travel portal on the list. Booking Holdings is rallying on encouraging vaccine news, and what the means for the return of leisure and corporate travel.
The bullish thesis makes sense, and after seeing revenue plummet 84% and then 48% in the past two quarters -- and Wall Street forecasting a 66% plunge for the current quarter -- things can only get better next year. The rub here is that we're talking about a 52-week high. The COVID-19 crisis wasn't a thing in early December of last year. Folks aren't in a hurry to book travel plans, and it may take years for business to recover to where things were a year ago. We're also in a worldwide recession where companies and globetrotters have bigger things to worry about than attending a convention in person or going on a family vacation.
If you're looking for safe stocks, you aren't likely to find them in Blink Charging, Stitch Fix, and Booking Holdings this week.
