My three stocks to avoid column for last week shifted away from meme stocks, and it didn't work out for me. The three names I figured were going to move lower for the week -- Walgreens Boots Alliance, Lamb Weston Holdings, and Grocery Outlet Holding-- rose 4%, 8%, and 6%, respectively, averaging out to a beefy 6% increase. The meme stocks I had singled out a week earlier tumbled.
The S&P 500 declined 1.3% for the week, so I fared horribly on a relative and absolute basis. Can I get back to a winning streak? The S&P 500 has still outperformed my bearish picks -- meaning that I beat the market, as these are stocks I suggest investors avoid -- in 18 of the past 25 weeks, but I've been off the past couple of weeks. This week, I see MicroStrategy (MSTR 1.10%), Hooker Furnishings (HOFT 0.11%), and Blink Charging (BLNK 2.17%) as stocks you may want to consider steering clear from. Let's go over my near-term concerns.
Image source: Getty Images.
MicroStrategy
It's impossible to talk about MicroStrategy without mentioning Bitcoin. MicroStrategy CEO Michael Saylor is fanatical about the world's most valuable cryptocurrency. Most company leaders wax fondly about their actual businesses, but Saylor spends 99% of his time on social media talking about the disruptive nature of Bitcoin.
MicroStrategy has spent nearly $4 billion of the company's money (and lately borrowed money) over the years to acquire 129,218 Bitcoins. The stake is worth $5.4 billion as of Sunday night. It has an enterprise value of just $7.3 billion, so it's fair to say that the value in MicroStrategy rests largely on Saylor's crypto shopping.
I'm bullish on Bitcoin, but the problem with MicroStrategy is that there's a lack of focus on the underlying company. Revenue at MicroStrategy has declined in six of the past seven years. Last year was the outlier, but the 6% gain still finds it generating less revenue than it did five years ago. MicroStrategy is often seen as a coattail play on Bitcoin, but it's not enough to mask the uninspiring enterprise analytics software company it built. With last month's rally in crypto starting to lose steam, MicroStrategy may be failing investors on both fronts right now.
Hooker Furnishings
One of the handful of companies reporting fresh financials this week is Hooker Furnishings. The furniture designer announces its fiscal 2022 fourth-quarter results on Wednesday morning. It's probably not going to be pretty.
Analysts see a 15% decline in sales compared to where it was a year earlier. Those same Wall Street pros see Hooker Furnishings posting a profit of just $0.10 a share, well below the $0.71 a share in earnings it delivered in the final quarter of fiscal 2021. If you feel that the company is just setting up the market for a beat, consider that it has fallen short in back-to-back quarters heading into this week's update.
It's a challenging time for an importer of wooden, metal, and leather furniture given supply chain constraints and high shipping costs, but the malaise isn't new. Hooker Furnishings served up back-to-back fiscal years of double-digit percentage declines on the top line before this year's uninspiring recovery.
Blink Charging
Electric car sales are booming, and those vehicles will need to get juiced up. Blink Charging is one the few publicly traded players specializing in fast-charging stations. One would think that Blink Charging is in the right place at the right time, but there's a problem when investors are too early with the pick-and-shovel plays.
This is still an evolving market, and Blink Charging is a small fry. It has just $21 million in trailing revenue, and its market cap is back above $1 billion. It's not just the stock that isn't cheap at nearly 50 times trailing revenue. The rollout of charging kiosks will be expensive, and analysts don't see a profit here until 2026. You can be sure that the playing field will be a lot more crowded by then, or that battery technology will evolve to the ability for more efficient charging at home.
There are still issues with the stock's lofty valuation and iffy business model. If you're looking for safe stocks, you aren't likely to find them in MicroStrategy, Hooker Furnishings, and Blink Charging this week.
