My "three stocks to avoid" column hit a couple of speed bumps in recent weeks, after rolling earlier this year. Would I get back on track? The three names I figured were going to move lower for the week -- MicroStrategy, Hooker Furnishings, and Blink Charging -- finished down 1%, up 1%, and down 4%, respectively, averaging out to a 1.3% decline.
The S&P 500 declined 2.1% for the week, so while I may have been correct about the stocks to avoid, the market fared worse; I lost. I've won in 18 of the past 26 weeks, but my recent skid continues.
This week, I see Tesla (TSLA +0.92%), Sleep Number (SNBR 2.87%), and Lucid Group (LCID +2.48%) as stocks you may want to consider steering clear of. Let's go over my near-term concerns.
Image source: Getty Images.
Tesla
I happen to personally own two of the three stocks in this week's column, making this a bittersweet list. Tesla is a name I've owned for more than a year, but I think the next-generation automaker isn't at its best when CEO Elon Musk is distracted. He's distracted right now.
Tesla reports its first-quarter financials on Wednesday. Your guess is as good as mine if Musk chose April 20 (4/20, a common reference to cannabis) intentionally as the earnings date; mad wealth can make you juvenile. We already know that car deliveries for the quarter came in slightly below market expectations.
Demand remains strong for Tesla's entry-level cars, and high gasoline prices are only helping. However, the stock's lofty valuation -- at a time when supply-chain constraints are real and cost controls are hard to come by -- means this is a tricky time to own the country's fifth-most-valuable company by market cap.
NASDAQ: TSLA
Key Data Points
Sleep Number
The other stock I own -- and it's also reporting fresh financials this week -- is Sleep Number. The company's product is unique in a world of cookie-cutter mattresses: It makes air-chambered mattresses with adjustable firmness settings. It even has a neat hook with the Sleep Number 360 smart bed it rolled out a couple of years ago, a high-tech air cloud that can adjust firmness settings and even elevation as it senses restlessness.
Sleep Number sales took off in the early months of the pandemic as homebound folks paid a premium for a good night's sleep. Sales have slowed lately, and the company's last quarter was a disaster. Revenue declined 13%, as the late arrival of semiconductor components delayed more than $125 million of net sales. Sleep Number claims sales would've been positive without the supply-chain hiccup, and even with the setback, revenue still climbed 18% for all of 2021.
Sleep Number reports its first-quarter results after Wednesday's market close. Analysts don't expect the data to be pretty; they're bracing for a 7% decline in revenue and an 86% plunge in earnings per share. (Investors might have expected the late arrival of parts in the previous quarter to help boost results this time around.)
It gets worse: Sleep Number has fallen short of Wall Street profit targets in two of the past three reports. Shares are cheap using most measuring sticks, and I'm a long-term bull on the stock. I just feel there's a lot for Sleep Number to prove with this week's report.
NASDAQ: SNBR
Key Data Points
Lucid Group
If I'm going with Tesla on this list, I may as well double down on another electric-vehicle maker that's well behind Tesla on the growth trajectory. Come on down, Lucid Motors.
Its flagship model, Lucid Air, turned heads late last year when it was named MotorTrend's Car of the Year. But will it be able to scale fast enough to justify Lucid's nearly $35 billion market value? Bulls will argue that growth is about to shift to a higher gear, but Lucid is still at least three years away from turning the corner to profitability. A lot can and will happen between now and then, especially as the more established automakers flood the market with electric versions of their more popular rides.
Right now Lucid Air has a starting price of $77,400, so it's aiming for a higher-end niche market. It also hasn't increased its starting price since announcing the cost of its base model six months ago, suggesting it may not have the pricing elasticity of other automakers that have bumped prices higher over that time. If Tesla offers a foggy outlook, investors will likely take a step back from other electric-car stocks.
NASDAQ: LCID
Key Data Points
It's going to be a bumpy road for some of these investments. If you're looking for safe stocks, you aren't likely to find them in Tesla, Sleep Number, and Lucid Group this week.
