Wall Street moved slightly higher in its first trading week of 2023. My "three stocks to avoid," which I thought were going to lose to the market in the past week -- Altria, Occidental Petroleum, and ExxonMobil -- rose 1.6%, 1.2%, and 0.2%, respectively, averaging out to a 1% increase.
The S&P 500 also moved in the right direction, increasing 1.4% for the holiday-abridged week. It was close, but I was right. I have been correct in 41 of the past 64 weeks, or 64% of the time.
Let's turn our attention to the week ahead. I see Corus Entertainment (CJREF +26.88%), Sinclair Broadcasting (SBGI 2.38%), and ExxonMobil (XOM +2.39%) 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. Corus Entertainment
Earnings season will pick up in earnest later this month, but there are a handful of companies stepping up with fresh financials this week. Corus Entertainment reports on Friday morning. The Toronto-based media company owns a few radio stations, specialty channels, and TV stations throughout Canada.
This isn't a very dynamic business. Revenue growth has failed to top 4% in each of the last five fiscal years, and that includes a couple of years of top-line declines that is has yet to overcome. Corus Entertainment is actually generating less revenue than it was three, four, and five fiscal years ago.
There are some interesting plays in content and digital delivery in the Corus arsenal, but growth is the ultimate report card. The allure for investors at this point is largely its chunky dividend of 10.3%, but is it sustainable? Operating income is at a seven-year low, and Corus has fallen short of Wall Street profit targets for three consecutive quarters. With cord-cutters growing and media advertisers recoiling in a hazy economy, it's hard to expect an uplifting financial update this week.
OTC: CJREF
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2. Sinclair Broadcasting
It's been nearly four years since Sinclair Broadcasting spent nearly $10 billion to acquire the Bally Sports collection of regional sports networks. That's so far proved to be a bad bet. Cord-cutting continues to weigh on the once juicy carriage rights it would collect, and most live TV streaming services have dumped Sinclair's offerings from their plans.
There is more to Sinclair than just its regional sports networks, though. It owns or operates 185 local TV stations across the country, as well as various marketing and technology platforms. But I'm going with the sports networks because all of Sinclair is commanding an enterprise value of just above $5 billion right now. Sinclair Broadcasting isn't offering up quarterly results this week like Corus is, but it's an industry that seems to be going in the wrong direction.
NASDAQ: SBGI
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3. ExxonMobil
The worst performer of the three stocks from last week's list was ExxonMobil. It made the cut as the most valuable company by market cap to move at least 50% higher in 2022, but I don't think the leaders of last year will be the top gainers of 2023.
ExxonMobil benefited from the reopening of the economy in 2021 and the subsequent surge in oil prices. With pain at the pump easing and a wobbly economy suggesting that we may be driving less in the future, we may have hit peak ExxonMobil. Analysts think things will get worse in the near term. They are targeting a 20% decline earnings per share on a 6% slide in revenue in 2023.
ExxonMobil's once beefy dividend has contracted to 3.3% after the stock's sharp ascent, less attractive these days with the best money market funds delivering more pocket change. With its prospects dim in the near term and the migration to electric vehicles is challenging for its long-term success, this could be the year -- and the week -- ExxonMobil proves mortal.
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 Corus Entertainment, Sinclair Broadcasting, and ExxonMobil this week.
