Wall Street took a small step back last week. The "three stocks to avoid" in my column that I thought were going to lose to the market in the past week -- BlackBerry, Steelcase, and Blink Charging -- plunged 19%, rose 8%, and slipped 13%, respectively, averaging out to an 8% decline.
The S&P 500 fell again lastweek, but it only budged 0.2% lower. I was right for the third week in a row. I have been correct in 40 of the past 62 weeks, or 65% of the time.
Let's turn our attention to the week ahead. I see Vipshop Holdings (VIPS -0.44%), Occidental Petroleum (OXY 0.82%), and Steelcase (SCS -1.49%) 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. Vipshop Holdings
It's been a rough year for Chinese growth stocks. International investors are steering clear of the world's most populous nation as government regulations, COVID-19-related lockdowns, and China's growing anti-business stance hinder growth prospects. An exception to the rule in 2022 is Vipshop Holdings. The online retailer of brand-name apparel and accessories at closeout prices is somehow beating the market. The stock is up better than 60% this year.
2022 hasn't necessarily been a good year for the Chinese e-tailer. This will be the first time in more than a decade of Vipshop's publicly traded tenure that it reports a decline in annual sales. The silver lining is that it has trounced analyst earnings estimates consistently over the past year. Vipshop remains highly profitable, and the stock is cheap by that measure, fetching less than 10 times forward earnings.
We won't get another quarterly report out of Vipshop for another two months, but it's easy to see investors wind down many of their Chinese growth stock positions heading into 2023. Vipshop may be bucking the trend, and the shares are refreshingly cheap, but they're vulnerable to selling as portfolio managers outside China clear out their stakes in the country's growth stocks.
2. Occidental Petroleum
Not every investor is having a brutal 2022. There are dozens of stocks that have more than doubled this year, and many of them have been energy stocks. The largest company by market cap in that group of gainers is Occidental Petroleum, up 121% in 2022 heading into the final week of trading.
The global oil and gas giant has naturally benefited from rising prices in 2022, but we're seeing relief as the year comes to a close. The leaders of 2022 may very well be the laggards of 2023, and we're already starting to see Occidental run out of, well, energy.
Analysts have been slashing near-term profit targets for Occidental Premium in recent months, and it still fell short in its latest report. Wall Street pros expect that revenue and earnings will decline 9% and 20%, respectively, next year.
If investors start taking profits on their winners -- and they probably have enough paper losses elsewhere to get the balance right -- this would be a good week to move on from Occidental Petroleum.
3. Steelcase
Just one of my three stocks from last week's list moved higher, and it didn't seem to deserve the upticks. Steelcase was one of the few companies to report quarterly results last week -- they were mixed at best.
The maker of office furniture saw a weaker-than-expected revenue climb of 12%, but it also experienced a 17% year-over-year slide in organic orders. Is anyone surprised that companies are paring back on office essentials in an era of layoffs, hybrid workforces, and foggy economic outlooks? Is anyone surprised that revenue guidance for the current quarter also was lighter than the market was expecting?
"Guidance could be sobering," I noted last week, and it was exactly that. Investors had a good week with Steelcase last week, but the fundamentals suggest that the good times might not last.
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 Vipshop Holdings, Occidental Petroleum, and Steelcase this week.
