Wall Street inched higher last week. I thought my three stocks to avoid for that week -- Walgreens Boots Alliance, Equinix, and Carvana -- were going to lose to the market. They rose 7%, climbed 3%, and fell 10%, respectively, for an average that was flat for the week.
The S&P 500 moved 0.4% higher, so I was right. I have been correct in 65 of the past 103 weeks, or 63% of the time.
Let's turn our attention to the current week. I see Carnival (CCL +0.21%), Cohen & Steers (CNS +0.11%), and American Airlines (AAL 2.42%) 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: WBA
Key Data Points
1. Carnival
My view hasn't changed on the world's largest cruise line operator. I am bullish on Carnival, and believe it's at an attractive entry point for long-term investors. It had an encouraging financial update last month, finally turning a profit after 14 consecutive losses. Demand is strong, as bookings are strong at premium rates. Carnival is at the point where it's finally starting to shore up its balance sheet after years of piling on leverage and dilution.
Singling Carnival out is more about the rough waters facing cruise lines in the near term. The political upheaval in the Middle East is going to create more unrest. It's hard to get excited about boarding a ship to visit exotic ports of call when there's turmoil that could make international travel treacherous.
Image source: Getty Images.
Carnival will be fine in the long run. The next few weeks could be challenging for the travel industry in general, hitting the cruise lines particularly hard. The stock market itself is also susceptible. Stocks somehow crept higher last week, but there could be more tricks than treats as we head into Halloween with the start of earnings season. As a high-beta stock, Carnival is vulnerable to the next market pullback.
NASDAQ: EQIX
Key Data Points
2. Cohen & Steers
It's a tricky time to be an investment manager, especially one that specializes in real estate and other income-producing real and alternative assets. Cohen & Steers operates several long-running mutual funds, of the open- and closed-end variety. The real estate market itself is struggling in this environment of high borrowing costs. The investment manager's offerings are also struggling to stand out as income investors flock to the low-risk realm of high-yielding money market funds.
Revenue has declined for four consecutive quarters, and it should be more of the same when Cohen & Steers reports its third-quarter results on Wednesday afternoon. The news should also be problematic on the other end of the income statement. Wall Street profit targets have been inching lower in recent weeks, and Cohen & Steers fell short of analyst estimates last time out.
NYSE: CVNA
Key Data Points
3. American Airlines
There is turbulence in the airline stocks. American Airlines hit a 52-week low on Friday. A rival air carrier took a hit last week after falling short of quarterly revenue expectations and hosing down its full-year earnings guidance. Throw in geopolitical upheaval that threatens to keep international travel in check and you have what could be a bumpy flight for investors in the near term.
American Airlines reports fresh financials on Thursday morning. Investors were already bracing for a rough performance. Pesky fuel prices and rising labor costs are weighing on the bottom line and the iffy economy may nip demand on the top line. Analysts that were expecting American to post net income of $0.91 a share for the third quarter two months ago were down to $0.62 a share a month later and down to $0.25 a share heading into this week's big reveal.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Walgreens Boots Alliance, Cohen & Steers, and American Airlines this week.
