In last week's article on three stocks to avoid, I predicted that DiDi Global (DIDI +0.00%), Norwegian Cruise Line Holdings (NCLH 0.98%), and Carnival (CCL 3.44%) (CUK 3.41%) would have a rough few days.
- DiDi Global had a rough week. China's leading ride-hailing platform tumbled 23%, as Chinese regulators initiated a cybersecurity review of DiDi and then pulled the app along with two dozen other applications.
- Norwegian Cruise Line slipped 5% during the week, and that was actually the best performer of the three. Cruise lines have taken a hit as the U.S. Centers for Disease Control and Prevention made it harder for the industry to recover.
- Finally, Carnival plunged 7%, doubling down on the cruise industry last week as stocks to avoid paid off.
The three stocks averaged an 11.7% decline for the week. The S&P 500 inched 0.3% higher, so I won for the third week in a row. Right now, I see Delta Airlines (DAL 6.88%), Blink Charging (BLNK 2.50%), and Osprey Bitcoin Trust (OBTC 2.77%) as vulnerable investments in the near term. Here's why I think these are three stocks to avoid this week.
Image source: Getty Images.
1. Delta Airlines
Earnings season is about to get underway, and one of the more problematic reports this week could be from Delta Airlines. The legacy carrier reports fresh financials on Wednesday morning, and it's easy to hold out for another dud report.
The airline industry is recovering, and year-over-year comparisons will obviously be kind. However, analysts have overshot the recovery runway here. Delta has posted wider-than-expected losses in each of the past four quarters. Leisure travel will be slow to return, and corporate travel may never come back to where it was before the pandemic.
2. Blink Charging
It's been a few months since the electric vehicles charging station operator made the cut on this weekly diss list. Its trailing revenue has increased from $6.2 million to $7.2 million. Its market cap has contracted from $1.7 billion to $1.5 billion.
The stock is still overvalued. Electric vehicles are booming, and they're going to need a place to be charged when not at home. The rub here is that Blink Charging is in a cutthroat niche, and it will take years for it to earn its current valuation. The stock is still trading at a trailing revenue multiple north of 200. Wall Street pros see just $12.4 million in revenue this year, nearly doubling to $24.6 million in 2022. These same analysts don't see a profit until 2024. This is not a company worth a 10-figure market cap.
3. Osprey Bitcoin Trust
There are so many ways to buy Bitcoin (BTC 0.29%) these days. Why pay more than you have to? Osprey Bitcoin Trust is an exchange-traded trust, giving investors a way to buy into the crypto market through traditional brokerages and even IRAs. It only owns Bitcoin, and with a dirt cheap expense ratio of 0.49% it would be a no-brainer if it traded near or ideally below the value of its assets. Unfortunately that is not the case.
Osprey enters this new trading week at $15.13, but the trust only owns $11.38 per share in Bitcoin, a 33% premium to its net asset value. This isn't a sustainable markup. The largest Bitcoin trust -- despite charging a stiff 2% annual fee -- is fetching an 11% discount. Work the math on how long it will take to make up that 4,400-basis-point difference in premium with a 151-basis-point gap in annual fees and it's easy to see why Osprey Bitcoin Trust is an investment to avoid. Just buy into Bitcoin directly if you plan to hold for a long time.
If you're looking for safe stocks, you aren't likely to find them in Delta, Blink, and Osprey Bitcoin Trust this week.
