My "three stocks to avoid" column had a good week to be playing the worrywart. The three names I figured were going to move lower for the week -- Tempur Sealy International, Tesla, and Noodles & Co. -- finished down 3%, down 13%, and up 11%, respectively, averaging out to a 1.7% decline.
The S&P 500 declined 3.3% for the week, so the stocks I figured would move even lower actually beat the market. I was wrong, but I have still been right in 19 of the past 28 weeks.
This week, I see iRobot (IRBT 9.25%), Rent-A-Center (RCII 3.11%), and Tupperware Brands (TUP -0.56%) as stocks you may want to consider steering clear of. Let's go over my near-term concerns with all three investments.
iRobot's distracted as it tries to clean up. The company that revolutionized appliance robotics -- and a decade ago seemed as if it would be a major player in military robotics -- is struggling to connect with investors. The stock hit a two-year low last week, shedding nearly half of its value over the past year.
iRobot is still a growth stock. It has grown its revenue by at least 7% for nine consecutive years, scoring double-digit top-line growth in all but two of those years. It's been stumbling lately. Analysts see a decline in sales for the first half of this year, fueled by supply chain setbacks. iRobot has also fallen short on the bottom line in two of its past three reports.
One thing all three of these stocks have in common is they report their latest earnings results this Wednesday. Another thing they have in common is that they missed Wall Street's profit target for their previous quarter.
On the surface, this should be a good time for Rent-A-Center. Inflationary pressures have folks nervous to make long-term purchases, giving this chain of rental furniture, electronics, and other home essentials a hungrier audience. Things haven't been going well lately for Rent-A-Center. It has fallen short of Wall Street's profit targets in back-to-back quarters, and analysts have been whittling down their near-term projections.
There are nearly 2,000 companies reporting quarterly results this week, and Rent-A-Center will get its turn on Wednesday afternoon. Its earnings call will follow on Thursday morning. There's clearly long-term demand for Rent-A-Center's offerings, but momentum is problematic heading into this week's financial update.
Remember when Tupperware was an iconic brand of household goods? Time hasn't been kind to Tupperware. When it slashed its dividend three years ago I made a pretty accurate observation.
"No dividend is sustainable if a business continues to shrink," I wrote at the time.
Sales have now declined in three of the past four years -- and six of the past eight. Wall Street feels the top line with shrink again this year, slipping 3%. The quarter it will unwrap this week will be particularly rough. Analysts are bracing for an 18% year-over-year decline with an even larger drop on the bottom line. As for the dividend, Tupperware suspended it in late 2019. I was right about the payout's sustainability.
Is anyone still throwing Tupperware parties anymore? The company's strategy to overcome stateside weakness with an international push hasn't been enough. The stock is somehow holding up better than you would think. Tupperware shares are more than 30% above its 52-week low. That's a long way down if it disappoints investors with its earnings report on Wednesday morning.
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 iRobot, Rent-A-Center, and Tupperware this week.