Wall Street took a big step up last week. I thought my three stocks to avoid -- Shopify, WD-40, and Joby Aviation -- were going to lose to the market in the past week. They soared 11%, 19%, and 3%, respectively. The final result was an average surge of 11% for the week.
The S&P 500 moved 2.4% higher. I was wrong. I've still been right in 57 of the past 91 weeks, or 63% of the time.
Let's turn our attention to the week ahead. I see Tesla Motors (TSLA 0.96%), WD-40 (WDFC 0.51%), and Pool Corp. (POOL +1.26%) 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
One of this year's biggest winners is Tesla. Shares of the leading maker of electric vehicles has more than doubled this year, up 128% so far in 2023. As one of the early reporters this earnings season, Tesla will deliver its second-quarter numbers shortly after Wednesday's market close.
Investors already know that Tesla delivered a record 466,140 vehicles for the three months ending in June. The real mystery is how the bottom line will play out. With Tesla cars priced substantially lower than they were near the end of last year, it could be a disappointing financial update this week.
Image source: Getty Images.
Analysts see earnings per share rising just 7% on a 45% increase in revenue for the second quarter. Still, things could be worse. Tesla rides are known for their acceleration, but we've seen some serious deceleration when it comes to bottom-line beats. Tesla has topped analyst profit forecasts by 27%, 6%, 5%, and 0% through the last four quarters. Momentum is not in the bull corner.
Tesla is doing a lot of things well to continue dominating the market. Rival automakers are embracing Tesla's charging protocols, and Tesla's entry-level cars continue to sell briskly. But it will still have to be a perfect quarter to justify Tesla's upticks. The stock should continue to be a long-term winner, but a pullback this week with a telltale earnings report on the horizon wouldn't be a surprise.
NASDAQ: WDFC
Key Data Points
2. WD-40
Shares of WD-40 soared 19% last week after the company posted well-received financial results. The company behind the namesake multipurpose lubricant and a wide range of maintenance, home care, and cleaning products beat Wall Street earnings and revenue targets by 13% and 15%, respectively, for its fiscal third quarter.
Why is WD-40 still on this list despite a blowout performance? Let's start with the bottom line. WD-40 reaffirmed the guidance that it lowered in April. Following the third-quarter beat, sticking to its previous profit outlook for the fiscal year implies a weaker than initially projected fourth quarter. Analyst estimates were lowered for the current quarter. Wall Street also sees decelerating revenue growth for the fiscal fourth quarter. The stock's pop means the 1.8% dividend yield a week ago is now down to 1.5%. It's not going to attract too many income investors in the current climate.
NASDAQ: POOL
Key Data Points
3. Pool Corp.
True to its name, Pool Corp. is the world's largest wholesale distributor of swimming pool and related backyard products. It reports quarterly results on Thursday morning, and once again it could find itself in the deep end.
Folks are holding back on big-ticket home projects, and that naturally includes pool additions. The slowdown should be evident in the numbers. Analysts see a 7% decline in revenue on a 17% drop in earnings per share. But it could be worse. Pool Corp. has fallen short of analyst profit targets in back-to-back reports. The top line also clocked in with a larger year-over-year decline than the market was targeting last time out, and Pool Corp. slashed its guidance.
If you want another sign that Pool Corp. could be out of its depth this week, fellow pool supply specialist Leslie (LESL +14.56%) plummeted 30% on Friday after announcing problematic preliminary financial results. Pool Corp. moved a mere 5% in sympathy on Friday, but it could be a deeper descent off the diving board this week with another quarter that's all wet.
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 Pool Corp. this week.
