Wall Street moved sharply higher for the fourth trading week of 2023. My "three stocks to avoid," which I thought were going to lose to the market in the past week -- BuzzFeed, General Motors, and 1-800-Flowers.com -- plunged 45%, rose 8%, and soared 11%, respectively, averaging out to an 8.7% drop.
The S&P 500 moved higher again, increasing 1.6% for the week. The market beat just one of the three, but BuzzFeed got clobbered. I was right. I have been correct in 44 of the past 68 weeks, or 65% of the time.
Let's turn our attention to the week ahead. I see Tesla Motors (TSLA +2.15%), Apple (AAPL +0.01%), and 1-800-Flowers.com (FLWS 0.30%) as stocks you might want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
NASDAQ: TSLA
Key Data Points
1. Tesla Motors
There's no denying that Tesla's been a lead car in the latest market rally. The company that made electric vehicles cool is up a blistering 87% since bottoming out in early January. It's up in 10 of the past 11 trading days, and that included Friday, when the general market buckled. Elon Musk, take a bow.
The concern is that investors are reacting to rhetoric instead of actions. Tesla spent December slashing prices on its cars to clear excess inventory, and it still fell short of Wall Street expectations for deliveries. Musk recently mentioned that demand was strong in January, but that came after a new series of price cuts.
Image source: Getty Images.
Tesla has the margin headroom to pull off these savage sticker price reductions. Bloated legacy automakers can't play that game. However, it doesn't mean Tesla won't suffer from friendly fire. The same analysts who thought Tesla could approach $6 in earnings per share this year just a few months ago are now looking for profit to clock in below $4 per share.
Will Tesla turn heads at its investor day in March? Sure. The Cybertruck looks interesting, and hope springs eternal for Tesla to introduce a smaller car that's even cheaper than the Model 3 to crush the low end of the pricing market. Betting against Tesla for the long run is dangerous, but for the stock to take a breather after a seemingly unjustified 87% rally in just four weeks is perfectly natural.
NASDAQ: AAPL
Key Data Points
2. Apple
Apple fell short this past week of Wall Street's top- and bottom-line quarterly expectations. That's the consumer tech giant's first miss since 2016. The 6% year-over-year revenue decline ends a streak of 14 quarters of positive results, and Apple sees more of the same during the current quarter. Even the iPhone faltered, with the iconic smartphone experiencing an 8% dip in revenue.
You may be wondering how far Apple dropped. Well, Apple stock actually rose on the news. Apple is a classic growth stock with a knack for pushing out disruptive products. Like Tesla, its long-term appeal is undeniably bullish. However, this wasn't a good report out of Cupertino. It wouldn't be a surprise if gravity finds Apple in the week ahead.
NASDAQ: FLWS
Key Data Points
3. 1-800-Flowers.com
Apple may have had a rough quarter, but 1-800-Flowers.com came through for its bouquet-clutching shareholders. It trounced analyst profit targets and landed just above top-line forecasts. The stock's 11% gain after last week's beat might be justified, but near-term prospects aren't bright.
1-800-Flowers.com sees a decline in revenue for the entire year. Consumers are paring back on discretionary spending, and that's going to leave a mark on the number of flower arrangements, cookies, popcorn tins, and berries that folks will be gifting for Valentine's Day later this month and beyond.
It's not easy to beat the market when you're not at your best. If you're looking for safe stocks, you aren't likely to find them in Tesla Motors, Apple, and 1-800-Flowers.com this week.
