- Churchill Capital IV seemed like it was going to be a bad call when it soared on Monday. Everything changed when the terms of its combination with Lucid Motors. Churchill Capital IV plunged 42% for the week.
- Osprey Bitcoin Trust entered the week trading at a nearly 30% premium to its Bitcoin (BTC 4.67%) assets. Even as Bitcoin moved lower for the week, investors still bid up the trust. It soared 63% for the week. Ouch.
- Alteryx moved lower every single trading day last week, clocking in with a total 15% slide.
The three stocks averaged a 2% gain for the week. The S&P 500's 2.4% dip means I lost. I got two of the three stocks right, but sometimes that isn't enough. This week, I see Norwegian Cruise Line Holdings (NCLH 0.51%), Osprey Bitcoin Trust, and Spirit Airlines (SAVE -12.26%) as vulnerable investments in the near term. Here's why I think these are three stocks to avoid this week.
1. Norwegian Cruise Line Holdings
I'm a fan of cruise vacations, but sometimes a port of call should be a port of put. Norwegian Cruise Line is the smallest of the three leading operators, and it's going to have a hard time standing out when the industry is chasing a thinning pool of potential passengers at the other end of the pandemic.
If Norwegian Cruise Line was trading at a steep discount to its pre-pandemic levels I could see the allure of the investment as a risky turnaround play. The problem here is that while the stock is trading at roughly half of where it was at the start of last year it has bloated its debt and share count raising money to stay afloat. I'm guessing most investors may not realize that Norwegian Cruise Line stock may have shed nearly 50% of its value since the beginning of 2020, but its enterprise value has only contracted from $18.3 billion to $17.8 billion.
Norwegian Cruise Line doesn't expect to begin sailing its flagship cruises until May at the earliest, more than a year after having to suspend its operations. It's not the same roughly $18 billion company it was 14 months ago.
2. Osprey Bitcoin Trust
Osprey Bitcoin Trust is a new low-cost way to invest in Bitcoin, but the math doesn't make sense. The stock enters the week at $39.92, even though its Net Asset Value (NAV) is $15.87.
There are some good reasons why Osprey Bitcoin Trust deserves a small premium. There aren't a lot of ways to own Bitcoin in traditional brokerage accounts, and Osprey's 0.49% annual management fee is much lower than the other more popular alternative stock exchange-listed alternative. The problem here is that this 152% premium to NAV is not sustainable.
3. Spirit Airlines
Why did Spirit Airlines hit a 52-week high last week? I get that airlines are holding up better than cruise lines. At least planes are up in the air. However, nothing is trending in the right direction for airlines in general and Spirit in particular.
Analysts see revenue plummeting 39% in the current quarter, and it's already lapping the initial pandemic disruption. It has posted a larger than expected loss in three of the past four quarters, and Wall Street pros have been jacking up their deficit forecasts for the current quarter. Did I mention how bad the recent climb in fuel prices is for the industry?
If you're looking for safe stocks, you aren't likely to find them in Spirit Airlines, Osprey Bitcoin Trust, and Norwegian Cruise Line Holdings this week.