It was another down week for the market, and the same can be said of my three stocks to avoid. The three names I figured were cruising for a bruising last week -- Bakkt Holdings, Hilton Worldwide Holdings, and Peloton Group -- were down 29%, up 1%, and down 15%, respectively, averaging out to a 14.3% decline.
It was a rough week on Wall Street. The S&P 500 fell 1.6% for the week, so I won easily again 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 16 of the past 18 weeks. What stocks are giving me the heebie-jeebies now? This week, I see Vipshop Holdings (VIPS 3.75%), Exact Sciences (EXAS +0.13%), and Booking Holdings (BKNG 0.28%) as stocks that you may want to consider steering clear from. Let's go over my near-term concerns.
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Exact Sciences
One of the companies reporting fresh financial results this holiday-abridged week is Exact Sciences. It checks off a lot of the red flags that tend to concern me heading into a new earnings report. Analysts aren't holding out for much, bracing for another beefy deficit on a 4% year-over-year decline in revenue. Analyst estimates have also inched lower in recent weeks. Wall Street pros were modeling a loss of $0.83 a share just a month ago. Now they're perched at $1.04 a share in red ink.
Making matters worse, Exact Sciences has posted a larger loss than analysts have been forecasting in back-to-back reports. The important counter here is that Exact Sciences isn't your typical company. It's a maker of cancer diagnostic tools, and like most next-gen medical stocks it often trades based on more than just its near-term performance as a business. Exact Sciences makes important products, including at-home colon cancer screener Cologuard and multi-cancer test CancerSEEK. It's bad form to bet against a company with good intentions, and it may have some good news to get the stock moving higher when it reports on Wednesday. The shares also plummeted 41% last year, so a fair amount of the pessimism is already baked into the stock.
Vipshop Holdings
Another potentially problematic earnings report this week could come from China's Vipshop Holdings. The online discounter of apparel and accessories joins Exact Sciences in reporting on Wednesday.
Several years ago Vipshop was a growth darling. The stock more than doubled for three consecutive years between 2012 and 2014. Selling brand-name merchandise at closeout prices was a timeless pitch, but things are different in the world's most populous nation these days. The "common prosperity" movement is weighing on the appeal of wearing brands in public, even if the clothing was secured at a deep discount.
Growth is expected to decelerate sharply for the third consecutive quarter. Analysts see a mere 1% year-over-year advance on the top line in Wednesday's report. Margins have also been sliding, and Vipshop is expected to earn a little more than half of what it did a year ago. Like Exact Sciences, Vipshop Holdings has fallen short of analyst targets in back-to-back reports. Unlike Exact Sciences, near-term growth performance is everything for this fashion-forward flash sale specialist. Vipshop traded as high as $46 in March of last year. It could be trading in the single digits by the end of this week.
Booking Holdings
Travel stocks are hot these days. At least five major hotel chains and a pair of theme park operators hit fresh 52-week highs. We also had Priceline.com parent Booking Holdings hit an all-time high on Wednesday. It's a surprising feat since Booking's business is nowhere close to where it was before the pandemic began. Trailing revenue is 39% below where it was at its 2019 peak, and it's not as if business was all that great back then either.
Revenue rose less than 4% in 2019, long before leisure travel restrictions kicked in and corporate travel called in sick. There's a lot to like in Booking Holdings as the leading online travel portal operator. It owns a lot of properties that will thrive at the right time. This doesn't feel like the right time, especially when so many companies that are at peak revenue levels are trading at such steep discounts.
If you're looking for safe stocks, you aren't likely to find them in Exact Sciences, Vipshop Holdings, and Booking Holdings this week.
