Wall Street took a small step back last week. My "three stocks to avoid," which I thought were going to lose to the market in the past week -- Vipshop Holdings, Occidental Petroleum, and Steelcase -- rose 1.2%, fell 1.5%, and climbed 0.9%, respectively, averaging out to a 0.2% increase.
The S&P 500 had another small dip last week, moving 0.1% lower. It was close, but I was wrong after three weeks of coming out on top. I have still been correct in 40 of the past 63 weeks, or 64% of the time.
Let's turn our attention to the week ahead. I see Altria (MO +0.63%), Occidental Petroleum (OXY +1.53%), and ExxonMobil (XOM 0.51%) 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. Altria
Smoking and other vices may have been creature comforts through a challenging 2022, but should Altria shares really have moved 4% higher on a dividend-adjusted basis last year? There are already enough investors who won't touch Altria because of the long-term concerns about tobacco as a growth industry, and it's not as if it has done much lately to skirt the market swoon of the past year.
Altria's revenue has been flat over the last two years, and the year ahead should be more of the same. Altria's been able to slightly improve its bottom-line performance, but it's also been losing retail market share over the past two years.
In Altria's defense, it continues to pay out a chunky dividend that isn't going away anytime soon. However, with investors likely to spend the first few weeks of 2023 picking from the ruins of some of the past year's slammed stocks, it's easy to see Altria falling out of favor among fickle shareholders.
NYSE: MO
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2. Occidental Petroleum
Occidental Petroleum was the largest company by market cap to more than double last year. I singled it out in last week's column, and while it fell nearly 2%, the stock still provided scintillating returns for investors in 2022.
I don't have some magical insight into the way the global oil and gas market will behave in the first week of 2023. This call -- and the next -- are about my belief that leading industries in 2022 will be laggards in at least early 2023. I can see why Wall Street's biggest sinkers were names to avoid through December, as tax-loss selling and money manager window dressing made their seasonal appearance. I see some of the hardest-hit names of 2022 recovering in the next few weeks, and it will come at the expense of the bigger gainers.
As I pointed out last week, Occidental Petroleum missed the market's earnings estimate in its latest quarter, and Wall Street pros are paring back their near-term profit expectations. Analysts now see Occidental Petroleum's earnings declining 25% in 2023 on a 9% slide in revenue.
NYSE: OXY
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3. ExxonMobil
The most valuable company to rise at least 50% last year was ExxonMobil. It may seem like a bad time to bet against a company that recently announced a whopping $50 billion buyback authorization plan, but I have my reasons.
As with Occidental Petroleum, analysts see ExxonMobil's performance cooling down in 2023. They see earnings per share and revenue declining 20% and 7%, respectively, from 2022's showing. We're already seeing oil prices fall sharply from springtime highs. The once-juicy yield that ExxonMobil had two years ago has fallen to 3.3% with the stock's heady ascent, and that's less than what income investors are generating from the top-yielding money market accounts without the risk of equity ownership.
There are two likely ways for 2023 to play out. In one scenario, the economy sputters, and consumers save money by cutting back on driving. In the other, the economy bounces back, and folks buy shiny new electric vehicles as they wean themselves off the ExxonMobil ecosystem. There are many other possibilities, but the appeal of ExxonMobil today is a lot less than it was a year ago, when the yield was high and business was set to improve in the year ahead.
NYSE: XOM
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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 Altria, Occidental Petroleum, and ExxonMobil this week.
