Wall Street took a hit last week. I thought my three stocks to avoid -- Frontier Communications, Cedar Fair, and Pool Corp. -- were going to lose to the market in the past week. They rose 4%, soared 9%, and dipped 1%, respectively. The final result was an average ascent of 4% for the week.
The S&P 500 moved 2.3% lower. I was wrong. I was very wrong. I've been right in 59 of the past 94 weeks, or 63% of the time.
Let's turn our attention to the week ahead. I see Tupperware Brands (TUP), Six Flags Entertainment (SIX 1.06%), and Ebix (EBIX 1.85%) as stocks you might want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
1. Tupperware Brands
You never know where the next meme stock will come from, but it's a fair bet that it's a household name that just happens to have a deteriorating business. Tupperware Brands has become the latest troubled stock shooting higher.
Shares of the food storage specialist have soared more than sevenfold over the last three weeks. The business model is still broken. It did secure a life-extending debt restructuring deal with its creditors late last week, but it comes at a price. The arrangement provides some near-term wiggle room in terms of liquidity, but it comes with dilution.
Image source: Getty Images.
Some of the warrants that creditors are receiving can be executed immediately, and cashing out soon has to be tempting for them. The recently buoyant shares create a great opportunity to offset the restructuring risk on their end with stock sale proceeds. Nothing kills a rally like the incentive for sizable stakeholders to take profits.
The future of Tupperware isn't any brighter. Revenue has still fallen in four of the past five years. Its business has been cut in half over the past decade. The once-profitable business with a chunky dividend is now failing on both fronts. The low share price has proven magnetic to speculators over the last three weeks, but -- unlike the lid on a Tupperware storage product that seals in freshness -- this trend will likely go stale pretty soon.
2. Six Flags Entertainment
This is one of the busiest weeks of earnings season, and one of the potentially troublesome financial updates could come from Six Flags Entertainment. Three years removed from COVID-19-related closures, it's back to business as usual for the regional amusement park operator. Unfortunately, a hot summer and recessionary fears could be eating into potential turnstile clicks. Rising costs could gnaw away at margins.
Analysts are holding out for a strong Six Flags report on Thursday morning. They see a 7% increase in revenue, lifted higher with a 47% surge in earnings per share. This is normally a situation I try to avoid for this column, but there are two trends working against Six Flags. For starters, Wall Street pros have been lowering their price targets as the peak travel season plays out. The analyst consensus was for Six Flags to earn $0.86 a share a month ago, down to $0.81 a share last week, and $0.78 a share now.
The other red flag is that Six Flags has fallen short of Wall Street net income forecasts in three of the past four quarters. Selim Bassoul has been CEO since late 2021. He was a rock star for nearly two decades at Middleby, but roller coasters and aren't commercial kitchens and teen thrill seekers are apparently even more fickle than chefs.
3. Ebix
Investors are bracing for disappointment when Ebix reports fresh financials on Wednesday. It's not going to be pretty for the provider of enterprise software solutions for the insurance and financial services industries. The pace of negative revenue growth has been accelerating. Ebix reported a 4% year-over-year decline in the fourth quarter of last year, expanding to a 15% decline in this year's first quarter.
Analysts are modeling a 21% top-line drop on Wednesday morning, and the bottom line will likely be even worse. Wall Street's profit target of $0.24 a share is a 62% plunge from what it earned last year. Making matters worse, Ebix has fallen short of analyst earnings estimates -- badly -- in back-to-back reports.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Tupperware, Six Flags, and Ebix this week.
