Happy Valentine's Day. Now let's break some hearts. My three stocks to avoid last week were on the move -- as ExxonMobil, Blue Apron, and Simon Property Group were down 0%, 15%, and 2%, respectively -- averaging out to a 5.7% decline.
It was a rough week to be long the market. The S&P 500 fell 1.8% for the week, so I won this week. The S&P 500 has now outperformed my bearish picks -- meaning that I beat the market, as these are stocks I suggest investors avoid -- in 15 of the past 17 weeks. I'm feeling pretty good about that. This week, I see Bakkt Holdings (BKKT +0.33%), Hilton Worldwide Holdings (HLT 0.66%), and Peloton Group (PTON +4.04%) as stocks that you may want to consider steering clear from. Let's go over my near-term concerns.
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Bakkt Holdings
Last week's biggest gainer among New York Stock Exchange-listed stocks was Bakkt Holdings, bucking the market's slide to come through with a 68% surge last week. Bakkt operates a digital assets platform that allows businesses to expand their payment offerings, drum up new revenue channels, and boost customer loyalty. Its custody, futures, and options businesses make it easy to enable cryptocurrency transactions in a regulated market.
There's a lot of long-term upside to Bakkt, and we're early in the crypto revolution. Bakkt hit the market four months ago as a special-purpose acquisition company, and as with most SPAC debutantes of 2021, the shares have fallen sharply in recent months. Despite last week's pop, Bakkt enters this new week trading 86% below its early November high.
Trailing results are tiny compared with its $1.9 billion implied market cap. Revenue rose 38% to $9.1 million in its previous quarter, but it should begin to pick up the pace in the coming quarters. The company reports again on Thursday morning, and a strong performance -- along with a buoyant crypto market -- will be necessary in the coming days to hold on and build on last week's 68% pop.
Hilton Worldwide
When it comes to lodging stocks, investors are more than happy to check in these days. Hotels are an obvious reopening play, and Hilton is obviously one of the top brands. Hilton stock hit an all-time high last month, and it was within 1% of setting a new high-water mark last week before it succumbed to the general market malaise.
The year-over-year comparisons are kind at Hilton. Revenue is expected to more than double when it reports its fourth-quarter results on Wednesday. Of course, there wasn't a lot of traveling going on in the fall of 2020. Zoom out another year, and this picture at Hilton becomes less worthy of its recent all-time highs.
Just 64.3% of its rooms were filled in its latest quarter, a lot better than where we were in the third quarter of the prior year, where less than a quarter of its rooms were occupied. The problem is that Hilton's occupancy rate was 79.1% for the same summertime quarter in 2019. You might think Hilton's more than making up for that shortfall by charging higher rates. Aren't all leisure companies leaning on inflation as a scapegoat to boost revenue and margins? Well, the average Hilton overnight rate of $141 in its latest quarter is less than the $145 it was charging two years ago. Because of the lower occupancy levels, revenue per available room -- or RevPAR -- is 21% lower than it was two years ago.
Heading into Wednesday's report, analyst profit targets have been inching lower in recent weeks. Hilton has also missed Wall Street's earnings estimate in three of the past four quarters. These are problematic trends heading into the earnings report this week for a company that's a room service gratuity away from an all-time high.
Peloton
Let's close with a stock that won't be reporting earnings this week. Peloton moved sharply higher last week, after buyout speculation and a massive restructuring that included a change at the top. The 41% surge was long overdue for the oversold stock, but now it could be time for a reality check.
After soaring last week, the stock is less attractive to potential bidders. A new CEO could offer fresh ideas to get Peloton back on track, but that's the kind of turnaround that will take time to play out. Peloton's surge last week was well earned, but keeping the upticks coming in the near term will be hard, since it will just thin out the pool of possible buyers.
If you're looking for safe stocks, you aren't likely to find them in Bakkt Holdings, Hilton, and Peloton this week.
