Wall Street took a hit last week. I thought my three stocks to avoid -- Tupperware Brands, Six Flags Entertainment, and Ebix -- were going to lose to the market in the past week. They plummeted 25%, 5%, and 40%, respectively. The final result was an average drop of 23% for the week.
The S&P 500 moved 0.3% lower. I was right. I've been correct in 60 of the past 95 weeks, or 63% of the time.
Let's turn our attention to the week ahead. I see Mattel (MAT +0.44%), Despegar.com (DESP +0.00%), and Tupperware Brands (TUP +0.00%) 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: MAT
Key Data Points
1. Mattel
On the surface, it doesn't make sense. Mattel shares are up less than 2% since Barbie hit theaters a little more than three weeks ago. It has become just the second release this year to top $1 billion in ticket sales worldwide, and it could be the top draw globally by the time it ends its cinematic run. The hit film is expected to generate a boost for Mattel's Barbie line. It's also now developing other films based on its most popular toys and games.
This could be a renaissance for Mattel. But it could also be a one-time fluke. The secret to Barbie's success is the movie's clever turn of turning the namesake doll into a feminist icon after decades of criticism and controversies going the other way. It's hard to see Mattel's Polly Pocket using the same playbook. But it's also tricky to wonder what ground a Barbie sequel can cover. One thing's for sure: There won't be another movie that takes so many shots at Mattel itself.
Image source: Getty Images.
Analysts don't see Barbie moving the needle at Mattel. They see revenue rising a mere 1% this year, followed by less than 4% growth in 2024. Mattel is profitable, but it's not in great shape. Its balance sheet is packing a lot of long-term debt, a bad look in the environment of rising rates. Mattel hasn't paid a dividend in six years. With its recent track record of sluggish sales -- revenue has declined in seven of the past nine years -- it's not appealing to growth or income investors.
NYSE: DESP
Key Data Points
2. Despegar.com
Living up to its Spanish moniker, Despegar.com stock has been taking off this year. The Argentina-based travel portal has seen its shares soar 68% this year. The travel market has recovered in Latin America, and Despegar is back to pre-pandemic revenue levels. It's not profitable, but it's getting there. It has rattled off six consecutive quarters of positive earnings before interest, taxes, depreciation, and amortization (EBITDA), including its best performance in five years on that front for its latest quarter.
Despegar reports its second-quarter results on Thursday morning. Expectations are in the clouds, but that's when the flight plan can get choppy. Analysts see revenue rising 18%. They also see Despegar finally posting a quarterly profit for the first time in more than four years, but that's also what they thought would happen in the first quarter. Spoiler alert: Despegar didn't generate positive net income three months ago.
Revenue will surely post a double-digit percentage advance later this week. Business is better for the Argentina-based company than it was a year ago. It also finally tapped a new chief financial officer this month, months after the previous CFO resigned. However, Despegar has posted a larger-than-expected loss in each of the past five quarters. The stock isn't likely to move higher if it fails to live up to the market's bottom-line expectations, especially if it means another loss.
NYSE: TUP
Key Data Points
3. Tupperware Brands
Shares of Tupperware surrendered a quarter of their value last week. I don't like to repeat picks after they take a substantial hit, but the storage specialist's stock had soared more than sevenfold in the three previous weeks. The meme stock's burst doesn't seem sustainable. There should be more downside to go.
Tupperware negotiated a dilutive restructuring of its debt with its creditors two weeks ago, but the model is broken. Tupperware is no longer the iconic brand it used to be, with revenue cut in half over the past 10 years. The easy money was made from speculators a couple of weeks ago, but now that circus has left town.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Mattel, Despegar.com, and Tupperware this week.
