My "three stocks to avoid" column sometimes catches a break with one bad stock sinking the gains elsewhere. The three names I figured were going to move lower for the week -- iRobot, Rent-A-Center, and Tupperware Brands -- finished up 3%, up 10%, and down 44%, respectively, averaging out to a 10.3% decline.
The S&P 500 declined 0.2% for the week, so the stocks I figured would move even lower actually did fare worse. I was right, and I have now been right in 20 of the past 29 weeks.
This week, I see Beyond Meat (BYND 0.10%), Redbox (RDBX), and New Relic (NEWR -0.02%) as stocks you may want to consider steering clear of. Let's go over my near-term concerns with all three investments.
Beyond Meat and Impossible Foods are making plant-based diets fashionable, but that doesn't mean investors are scoring meaty gains here. Beyond Meat reports fresh financials on Wednesday afternoon, and the outlook is pretty grim. Analysts see Beyond Meat's loss for the first quarter more than doubling to $1.01 a share on a mere 4% year-over-year increase in revenue.
If this doesn't sound very exciting, it gets worse. Beyond Meat has posted a larger-than-expected deficit in each of the past four quarters. Those same Wall Street pros have also been recently widening their loss projections for Beyond Meat. Analysts were modeling $0.57 a share in red ink for the first quarter three months ago. That per-share target ballooned to $0.98 a share last month, and it's now more than a buck.
Inflationary pressures could be pricing premium-priced foodstuffs out of the reach of the masses. Beyond Meat is a quality company, but until it can actually deliver better-than-expected results on the bottom line the stock's valuation is "beyond" reasonable.
Some gains don't feel earned. DVD and video game rental specialist Redbox has seen its shares more than triple over the past four weeks. It's the latest retro company that was once seemingly left for dead in the disrupted retro graveyard to come blazing back to life as a meme stock.
There isn't a lot to justify the surge. Redbox does have a presence near the entrance of 40,000 high-traffic retail outlets, but these disc-spewing touchscreens are collecting dust. Revenue plummeted 47% last year, following a 36% drop the year before and a 21% slide the year before that.
Redbox is rolling just because investors think they can catch lighting in a meme-stock bottle again just by latching on to a throwback business with a household brand name. The rub is that Redbox is unlikely to build the same kind of cult following we saw last year for the first batch of trendy retro winners. Investors can see that Redbox isn't the kind of business that can be feasible in today's world.
Investors haven't been very forgiving to cloud stocks, and New Relic feels that pain. The provider of software performance monitoring saw its stock get crushed when it last reported financial results three months ago. It tries to win investors back with its fiscal fourth quarter on Thursday.
Growth has been uninspiring at New Relic lately. Revenue rose 11% in fiscal 2021, and it's expected to be in the teens for these next two fiscal years. The bottom line is even more problematic, as margins are getting crushed, resulting in a rare earnings miss last time out. Momentum is problematic heading into this week's report.
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 Beyond Meat, Redbox, and New Relic this week.