I ended 2021 on a hot streak with my weekly column where I single out stocks to avoid in the week ahead. The new year is proving to be a bit more challenging. My three stocks to avoid last week were on the move -- as Constellation Brands (STZ), GameStop (GME), and SeaWorld Entertainment (SEAS) were down 2%, down 5%, and up 5%, respectively -- averaging out to a 0.7% decline.
The S&P 500 tumbled 1.9% for the week. The stocks I picked did move lower -- on average -- but after 11 weeks of having my bearish calls beat the market, I fell short this past week. This week, I see Delta Airlines (DAL), Lucid Motors (LCID), and SeaWorld Entertainment (SEAS) as stocks that you may want to consider steering clear from. Let's go over my reasons for the near-term pessimism.
There aren't a lot of companies reporting fresh financials this week. Earnings season kicks off later this month, and one company to watch will be Delta. The legacy air carrier reports quarterly results on Thursday morning.
The year-over-year comparisons will impress. Wall Street pros see Delta squeezing out a small profit, with revenue more than doubling against depressed results a year earlier. The problem is that the recent surge in COVID-19 cases has to be weighing on future bookings. We've already seen the industry cancel flights just because the airlines can't round up enough healthy hires to keep their scheduled routes running.
Throw in tenuous passengers -- and the potential for vaccination requirements if case counts continue to shatter previous records -- and the near-term outlook is bumpy enough to probably want to have you returning to your seat to buckle up. The numbers for the quarter itself may be fine on Thursday, but the outlook could be problematic.
One of last week's biggest gainers was Lucid Motors, moving 10% higher as the general market headed lower. There's plenty of buzz for Lucid's luxury electric vehicles. Its flagship Lucid Air was tapped as MotorTrend's Car of the Year two months ago, a big honor for a car that just hit the market.
Lucid is exciting, and it's making a global push to grow quickly. The knock on Lucid is that it now commands a market cap of $69 billion. Lucid Air is a great-looking car with rave initial reviews, but it's a niche product with a starting price of $77,400. Analysts don't see profitability for at least another three years, and other companies with far more experience in making and selling automobiles are diving into the market for electric cars.
This theme-park operator cut my winning streak short after 11 weeks. Over the past seven weeks, it's also the lone stock among the 21 selections that moved higher for the week. So it would only make sense for SeaWorld Entertainment to return to this list again. The stock more than doubled last year, and it was one of the rare consumer-facing stocks to kick off 2022 on a positive note.
As I mentioned last time, I think SeaWorld will have a strong quarter to report when it steps up with its next financial update in a few weeks. Right now, the bigger concern is that COVID-19 cases will thin out crowds at theme parks. Unlike regional operators that are largely closed this time of year, most of SeaWorld's parks are year-round operations in Florida, California, and Texas. All three of those states are seeing a significant surge in case counts and hospitalizations. They may not necessarily close down, but waning attendance and thinning staffs could be a problem.
If you're looking for safe stocks, you aren't likely to find them in Lucid Motors, Delta Airlines, and SeaWorld Entertainment this week.