We're heading into a holiday-abridged trading week, but volaility never takes a breather. I pick three stocks at the start of every week that I think will lose to the market in the week ahead, and I've been doing pretty well lately. My three stocks to avoid last week were on the move -- up 5%, down 13%, and down 24% -- averaging out to an 10.7% decline.
The S&P 500 rose 0.3% for the week, so I was the relative winner with my bearish calls for the fifth consecutive week. This week I see Rivian (RIVN 1.49%), Jack in the Box (JACK -0.85%), and Cracker Barrel (CBRL -0.26%) as stocks that you may want to consider steering clear from this week. Let's go over my reasons for the near-term pessimism.
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Rivian
Last week was great for recently public electric vehicle upstarts. Rivian has been public for less than two weeks, has no meaningful trailing revenue, and has a market cap of nearly $115 billion.
There's a lot to like when it comes to Rivian. It has more than 55,000 preorders for the two electric vehicles it's introducing. It has a couple of big-name investors ready to back it in more ways than one. It is the unknowns that make it difficult to wonder if Rivian is worth as much as it is right now. How big is the market for an unproven electric SUV and truck starting at nearly $70,000 apiece? How will it catch up to the niche leader without the same advantages in autonomous driving and a proprietary network of charging stations?
Rivian the company may do well. It will take a long time for it live up to its current valuation. The market is already feeling pretty vulnerable for stocks trading at outlandish valuations, and Rivian is susceptible to tumble as the new stock smell starts to fade in its third week of trading.
Jack in the Box
Fast food chains have been making the most of the pandemic recovery, and Jack in the Box will be the next major concept to report when it announces fresh financial results after Monday's market close. Analysts see decent growth for the fiscal fourth quarter, with earnings per share and revenue climbing 9% and 13%, respectively. However, Wall Street profit targets have been inching lower in recent weeks.
With inflation driving food costs higher and wages rising to remain fully staffed it's not easy running a run-of-the-mill burger concept these days, even with Jack in the Box relying on franchisees to operate 93% of its restaurants. There's an argument to be made for restaurant chains as a smart play at this stage of the economic recovery. However, Jack in the Box isn't the kind of altruistic operator that can afford to raise prices or coast on its brand. Hit the road, Jack!
Cracker Barrel
Another restaurant chain reporting quarterly results this week is Cracker Barrel. This is an entirely different concept, one that specializes in southern specialties along major highways. Attached general stores are a novel touch, accounting for more than 20% of the chain's revenue.
Cracker Barrel seems like an even more obvious play on the economic recovery, feasting on the uptick in travel across the country's expressway exits. It even fared well last year when things weren't so hot, posting double-digit gains. It's still problematic. Cracker Barrel has missed analyst profit estimates in two of the past three quarters.
If you're looking for safe stocks, you aren't likely to find them in Rivian, Jack in the Box, and Cracker Barrel this week.
