Investors can't seem to catch a break these days. The "three stocks to avoid" in my column last week that I thought were going to lose to the market -- Cracker Barrel Old Country Store (CBRL 4.12%), Rite Aid (RAD 20.00%), and Lennar (LEN -1.51%) -- fell 6%, 29%, and 3%, respectively, averaging out to a 12.7% decline.
The S&P 500 experienced a 2.9% move lower, so I was correct. I have been right in 32 of the past 50 weeks, or 64% of the time.
Now let's look at the week ahead. I see Apple (AAPL -1.22%), Conagra Brands (CAG 0.86%), and Gold Fields (GFI -0.68%) as stocks you might 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. Apple
The country's most valuable company by market cap -- the only one currently perched above $2 trillion in value -- proved mortal last week. The consumer tech giant tumbled 8%, a big drop for a titan that was previously holding up well against the correcting market. Apple is finally trading closer to its 52-week low than its high.
The new iPhone 14 may have generated some buzz when it was unveiled a few weeks ago, but consumers have tired of annual upgrade cycles for smartphones. The incremental improvements are nice, but they may not be enough to woo shoppers who are already clutching their savings harder than they have in a long time.
There was a notable analyst downgrade last week. Wamsi Mohan at Bank of America thinks the global climate of inflation, rising interest rates, and geopolitical conflict will weigh on the previously waterproof Apple stock. As a company with heavy volume outside the U.S. market, it's worth noting that the strong dollar will eat into reported revenue from those overseas transactions. There was also a Bloomberg story reporting that Apple is asking suppliers to pare back iPhone 14 production in light of uninspiring global demand.
Is Apple overvalued at 23 times trailing earnings? Apple is a company that seems to have one good fiscal year followed by two years of single-digit and sometimes even negative revenue growth. It could bounce back after last week's setback, but when I see all those wireless company ads pitching iPhones for practically nothing, I see a behemoth behind an aspirational brand that could be in trouble.
2. Conagra Brands
Instinctively, you don't want to bet against Conagra Brands. It's the company that stocks supermarket shelves with Duncan Hines cake mix, Slim Jim jerky, and Hunt's ketchup. Even in a recession, we have to eat. The problem for a king of brands is that rising food prices are probably sending shoppers to lower-margin house brands. Why buy Conagra's Pam or Reddi-Wip when the store-brand version of the cooking spray or whipped cream is easier on the pocket?
Conagra reports financial results for its fiscal first quarter on Thursday morning. Analysts aren't holding out for much, and it's not as if Conagra is an upbeat earnings surprise machine after beating Wall Street profit targets just once over the past three reports. The market sees Conagra growing its revenue by less than 5% this fiscal year, with earnings per share rising even less than that. Sales are expected to slow to just 1% growth next fiscal year. The 3.8% yield should provide some support, but it's not exactly the safe haven it plays itself out to be.
3. Gold Fields
September was brutal. It was the market's worst month since March 2020. It was also the worst September -- a month that has historically been challenging -- in 20 years. The bear market may not be over, but it wouldn't surprise me if there was at least a small bounce early in October. This call finds me eyeing Gold Fields.
I'm not an expert on South African gold mining stocks, but I saw what happened last week. As most stocks tumbled, precious metals proved shiny. Half of the 10 largest stocks to gain at least 10% last week were gold miners, and Gold Fields commands the largest market of the five stocks on that list. The fundamentals for Gold Fields are fine, and it's in the process of gobbling up a smaller player to expand its global footprint. However, I needed to find a sector that could slide at the expense of a market rally, and tag, you're it, Gold Fields.
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 Apple, Conagra, and Gold Fields this week.
