Wall Street took a step back during holiday-abridged trading last week. I thought my three stocks to avoid -- Altria, Levi Strauss, and Joby Aviation -- were going to lose to the market in the past week. They dipped 2%, 9%, and 7%, respectively. The final result was an average decline of 6% for the week.
The S&P 500 moved 1.2% lower. I was right. I've been correct in 57 of the past 90 weeks, or 63% of the time.
Let's turn our attention to the week ahead. I see Shopify (SHOP 2.63%), WD-40 (WDFC 0.51%), and Joby Aviation (JOBY 0.46%) as stocks you might want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
NYSE: MO
Key Data Points
1. Shopify
Growth investors have been rewarded lately. Shares of Shopify have nearly doubled in 2023, but has the e-commerce platform earned the upticks? With the market susceptible after so many fallen darlings have rallied back, it could be time to take a more cautious stance on Shopify.
Growth has slowed at Shopify. After a decade of cranking out top-line gains of at least 47% a year, deceleration has taken over. Shopify's revenue rose 21% last year. Analysts see the business growing by just 20% this year. Things may not get better in the near future.
Image source: Getty Images.
Shopify saw the gross merchandise volume sold through its hub rise just 15% in its latest quarter. Slowing growth doesn't warrant Shopify's current market cap of $79 billion.
It's true that Shopify is now profitable on an adjusted basis. It also recently improved its cost structure by selling off its logistics business, a move that trimmed its payroll by 20%. But don't applaud the retreat. With the competition getting smarter, Shopify is particularly vulnerable to the next market sell-off.
NYSE: LEVI
Key Data Points
2. WD-40
It's going to be a quiet week ahead of the start of earnings season later this month, so let's turn our attention to a company known for making squeaky things go silent. WD-40 reports fresh financials after the market close on Monday. It's the company behind the multipurpose lubricant that bears its name as well as other maintenance, home care, and cleaning products.
The market is holding out for a respectable performance for its fiscal third quarter. Analysts see revenue and earnings climbing 12% and 14%, respectively. However, even WD-40 conceded that sales volume came in light in its last report. WD-40 has also fallen short on the bottom line in the three quarters before that. WD-40 may be considered an all-weather performer, but it's also not a hotbed of growth. It has topped 8% annual top-line gains just once over the past dozen years. The 1.8% dividend yield also isn't very savory in the current climate.
NYSE: JOBY
Key Data Points
3. Joby Aviation
I singled out Joby Aviation last week after its 62% surge the prior week. There was some good news for Joby Aviation, getting one step closer to getting up in the air and generating revenue. The next-gen air taxi specialist also landed a notable South Korean investor.
The stock's 7% slide last week suggests I was right, but I think there could be more near-term downticks. Joby Aviation still seems overvalued even at this week's lower $6.4 billion market cap. Finally generating revenue is important, but Wall Street still thinks running a profitable endeavor is still at least five years away.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Shopify, WD-40, and Joby Aviation this week.
