The market finally bounced back after three rough weeks, but the same could also be said about the three investments I identified in my "three stocks to avoid" column last week. The three stocks I thought were going to lose to the market -- RH, National Beverage, and Coinbase -- rose 8%, sank 12%, and soared 24%, respectively, averaging out to a 6.7% gain.
The S&P 500 experienced a 3.6% move higher. I was wrong, but I have still been right in 30 of the past 47 weeks. I'll take it.
Now let's look at the week ahead. I see Latch (LTCH +0.00%), InnovAge Holding (INNV 1.49%), and, again, Coinbase (COIN +1.09%) as stocks you may want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
Image source: Getty Images.
1. Latch
One of last week's biggest winners was Latch, up a scintillating 48%. The provider of cloud-based access to locked apartments bounced back after receiving a non-compliance notification from its exchange last month for not filing its quarterly report on time. Latch would reveal that an audit shows it may have issues with revenue recognition practices and historic key performance indicators.
Last week's rally is notable. We still don't have the overdue numbers and potential revisions, but the stock is now trading higher than it was before the exchange issues its non-compliance notice.
Latch allows landlords to charge a premium for renters of its apartments, giving them access to unlock their homes when they're not there. The system is popular, and even if Latch has to revise earlier financials the growth will still be impressive. The problem with Latch is that it's burning through money at an alarming clip. Right now it has enough cash on its books to give it a rare negative enterprise value. However, eventually Latch will have to dilute its shareholders or issue debt at high borrowing costs. The stock's big pop last week seems wasn't justified, and it wouldn't be a surprise to see it give some of those gains back after moving sharply higher for five consecutive trading days.
OTC: LTCH
Key Data Points
2. InnovAge
One of the few companies reporting fresh financials this week is InnovAge. The company's goal is inspiring, providing in-home all-inclusive care so frail senior citizens can play out their golden years without having to check into an assisted-living facility or hospice. The problem with InnovAge is that growth is slowing as it tries to expand its reach.
When InnovAge reports its fiscal fourth quarter results after Tuesday's market close analysts see revenue growing a mere 1% to $173.8 million. Wall Street pros also see a loss, reversing a small profit a year earlier. You can root for InnovAge to clear that low bar, but it has fallen short on the bottom line relative to market expectations in back-to-back quarters heading into this week's update. It's not the kind of momentum you want to see ahead of an important quarterly report.
NASDAQ: INNV
Key Data Points
3. Coinbase
The country's leading crypto exchange soared last week, sinking my chances to come out ahead with last week's column. But I'm sticking to it. Despite the recovery in the leading digital currencies there is still a crisis of faith for investors after seeing a couple of popular trading and staking platforms come under this summer.
An analyst upgrade and a decision to fight back against the U.S. Treasury on a recent anti-crypto decision helped fuel that stock's rally late last week. An important "merge" for the world's second most valuable cryptocurrency denomination should take place this week, but it wouldn't be the first time that the market "sells on the news" of a highly anticipated event. Last week's 24% pop in Coinbase shares likely discounts big gains on the discounted news.
NASDAQ: COIN
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 Latch, InnovAge, and Coinbase this week.
