Please ensure Javascript is enabled for purposes of website accessibility

3 Stocks to Avoid This Week

By Rick Munarriz - Jan 18, 2021 at 10:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These three stocks seem pretty vulnerable right now.

I took a look at three stocks to avoid last week, predicting that Blink Charging (BLNK 4.53%),Tesla Motors, and Delta Airlines were going to have a challenging week. I missed.

  • Blink Charging rose early in the week, but gave back a chunk of those gains on Friday. The electric vehicle charging specialist still closed out the week with a 7% gain.  
  • Tesla shifted in reverse with a 6% decline. The stock had rallied in recent weeks on strong deliveries and its addition to the S&P 500 index. 
  • Delta Airlines failed to impress with its quarterly report, but the airline was flat for the week. It declined a mere 0.1%, so let's call that a draw.

The three stocks averaged a 0.3% advance. It may not seem like much, but the S&P 500 declined 1.5% in that time. I was wrong. This week, I see Blink Charging, DoorDash (DASH 7.61%), and GameStop (GME 11.54%) as vulnerable investments in the near term. Here's why I think these are three stocks to avoid this week.

A seated woman looks down as a stock chart and question marks are on the wall behind her.

Image source: Getty Images.

Blink Charging

When gravity catches up to Blink Charging -- and it will at some point in 2021 -- the warning signs will be more evident than they seem right now. It's not just the fact that a company with a mere $4.5 million in trailing revenue is fetching a market cap of nearly $2 billion, a whopping 435 times its top line. It's not just the question marks behind the business model, the elusive path to profitability, and the inevitable cutthroat competition if this is a market worth fighting for in the future. 

We can just look back to last week. Chairman Michael Farkas sold $22 million worth of Blink Charging stock, and the shares still moved higher for the week. I know I've been on the wrong end of the stock chart by singling out this Blink Charging as an investment to avoid in the first two weeks of 2021. Let's see if the third time's the charm -- or harm, in this case. 

DoorDash

One of the more surprising names hitting fresh highs last week was DoorDash. The leading takeout delivery specialist seemed overvalued when it soared out of the gate during last month's IPO. Now it's trading even higher.

Buzz about DoorDash entering the largely untapped Japanese market helped fuel the rally, but one has to be skeptical about a seemingly obvious opportunity when others have failed in the past.  DoorDash is growing at a fast clip these days.  Revenue soared 268% in its latest quarter. However, with the world finally seeing a light at the end of the pandemic tunnel we could be at Peak DoorDash. As hot as this December IPO stock has been, the volatility cuts both ways. Expect DoorDash to be one of the biggest sinkers in the next market correction given the limitations of its model.

GameStop

It's hard to believe that GameStop more than doubled last week, soaring 100.7%. The small-box video game retailer had a lot of things go right. It installed three new activist directors to its board, signaling a willingness to shake things up. It generated positive holiday sales, fueled by the rollout of new video game consoles. Finally GameStop has heavy short interest. It doesn't take much to trigger a short squeeze. 

It's hard to see the gains sticking around. GameStop can replace its entire board with activists. It's not going to stop the systemic decline with a model that revolves around the selling and the more lucrative reselling of physical video games in a digital world. The strong holiday consists largely of low-margin hardware. As for the short squeeze, if many have naysayers covered last week it will make another squeeze less likely in the near term. 

If you're looking for safe stocks, you aren't likely to find them in Blink Charging, DoorDash, or GameStop this week.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
GME
$128.46 (11.54%) $13.29
Blink Charging Co. Stock Quote
Blink Charging Co.
BLNK
$15.22 (4.53%) $0.66
DoorDash, Inc. Stock Quote
DoorDash, Inc.
DASH
$73.69 (7.61%) $5.21
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$707.73 (7.43%) $48.93
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$40.83 (5.78%) $2.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.