My winning streak is going strong on the stocks I feel could be sliding in the week ahead. My three stocks to avoid last week were on the move -- as Digital World Acquisition, Sweetgreen, and Steelcase were down, 11%, 12%, and 6%, respectively -- averaging out to a 9.7% decline.
The S&P 500 fell 1.9% for the week, so I was the relative winner with my bearish calls for the ninth week in a row. This week, I see Cintas (CTAS -0.17%), Beyond Meat (BYND 0.16%), and GameStop (GME 1.07%) as stocks that you may want to consider steering clear from. Let's go over my reasons for the near-term pessimism.
Image source: Getty Images.
Cintas
There aren't a lot of companies reporting earnings in this holiday-abridged trading week, but one that could prove problematic is Cintas. The leading provider of employee uniforms and other workplace essentials reports quarterly results on Wednesday morning. Cintas has held up fairly well over the past year. It has beaten Wall Street profit targets in each of the past four quarters. The stock hit a new all-time high last week. Momentum seems to be on its side, but I'm skeptical.
There are a lot of factors weighing on Cintas' business, even if the market doesn't see it that way. With COVID-19 cases surging again, there will be renewed resistance to load up warehouses, factories, and office buildings with employees. Rising labor and input costs also find companies scrambling for efficiency, finding ways to be more productive with fewer boots on the ground. Fewer in-person staff means a smaller Cintas tab. Cintas has a strong track record of thriving in all climates, but I don't think it merits being one of the handful of stocks that hit new highs during last week's chaotic trading.
GameStop
This year's original meme stock has been rallying the past few trading days, up 20% since potentially bottoming out on Tuesday. There's a bullish argument to be made that GameStop is squeezing out the shorts again, but there's also some year-end tax-loss selling that's likely to take place here in the final two trading weeks of 2021.
Despite the recent upticks, most investors that have bought into GameStop in the last nine months are currently underwater. The stock actually moved lower last week despite the mid-week reversal. If they have gains elsewhere, it may be tempting to unload the stock to offset some of the capital gains they realized elsewhere. GameStop already slipped earlier this month after posting another poorly received quarterly report. If it's not able to build on its positive market momentum, there could be a wave of selling.
Beyond Meat
It's been a rough year for Beyond Meat, and that makes it a bigger candidate for year-end tax-loss selling than GameStop. The company that wowed investors when it hit the market two years ago as a play on embracing plant-based diets has faltered after a rough 2021. The stock has fallen 45% so far this year.
Growth has decelerated sharply, and it's still a couple of years away from profitability. Short interest is inching higher -- so a short squeeze is certainly possible -- but this is still a company trading at 10 times trailing revenue in an industry where the multiples are considerably lower. Beyond Meat and rival Impossible lead the premium end of this market, but moats are getting upended with so many other companies attempting to serve this niche.
If you're looking for safe stocks, you aren't likely to find them in Cintas, Gamestop, and Beyond Meats this week.
