It didn't take long for the fourth quarter to start buckling. Stocks generally moved lower last week. The "three stocks to avoid" in my column last week that I thought were going to lose to the market -- Walgreens Boots Alliance (WBA -0.23%), Blue Apron (APRN), and Gold Fields (GFI 0.17%) -- rose 9%, fell 16%, and dropped 11%, respectively, averaging out to a 6% slide.
The S&P 500 experienced a 1.6% move lower. I was correct. I have been right in 33 of the past 52 weeks, or 63% of the time.
Now let's look at the week ahead. I see Snap (SNAP 6.70%), Freeport-McMoran (FCX 0.68%), and, again, Walgreens Boots Alliance as stocks you might want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
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1. Snap
The sell-off in many of the social media stocks has been brutal. Snapchat parent Snap has suffered an 88% stock decline since peaking 13 months ago. Things might not get any better for Snap shareholders when the self-billed "camera company" steps up with fresh financials this week.
Snapchat has 347 million daily active users. It has a stranglehold on young users worldwide, as it reaches at least 75% of the 13- to 14-year-olds in more than 20 different countries. But it's still a tough platform to monetize. Momentum already wasn't on its side, posting larger-than-expected losses in back-to-back quarters. The near-term outlook is gloomy for ad-supported businesses, explaining why Wall Street has slashed this year's profit forecast by half for 2022.
Snap reports shortly after Thursday's market close. Investors expect a return to profitability for Snap during the holiday quarter, but that can change if Snap offers up unsettling guidance. With growth slowing, its share count growing, and margins under fire there are already plenty of problems with the developing Snap picture.
2. Freeport-McMoran
Copper prices have plummeted over the past four months, and that should translate into a rough quarterly report when Freeport-McMoran announces on Thursday morning. This is a great stock to own when copper demand is on the rise, but that's obviously not where we are now with the cyclical metal.
Freeport-McMoran fell well short of Wall Street's profit targets last time out. We may get a repeat performance this week, even with analysts dramatically slashing their bottom-line expectations. Three months ago, Wall Street pros were expecting a profit of $0.86 a share for Thursday's third-quarter report. Now they're only modeling net income of $0.30 a share.
Freeport-McMoran does offer a 2.2% yield, but that's not enough to woo income investors these days. The best money market funds are yielding well above that now -- and climbing -- just as copper prices are going the other way.
3. Walgreen Boots Alliance
The one stock from my column last week that rose higher -- drugstore giant Walgreens -- earned upticks despite a mixed report. Walgreens did beat expectations, but its full-year guidance was below Wall Street consensus estimates. The market sided with the bulls, but it's interesting to note that Morgan Stanley analyst Ricky Goldwasser walked away from the earnings call thinking Walgreens was being overly optimistic with its projections.
I think last week's gains were overblown. It wouldn't surprise me to see the stock take a step back this week.
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 Snap, Freeport-McMoran, and Walgreens this week.
