Wall Street moved lower last week. I thought my three stocks to avoid for that week -- Carnival, Cohen & Steers, and American Airlines -- were going to lose to the market. They fell 10%, 7%, and 5%, respectively, for an average decline of 7.3% for the week.
The S&P 500 moved 2.4% lower, but I was still right. I have been correct in 66 of the past 104 weeks, or 63% of the time.
Let's turn our attention to the current week. I see Altria (MO +0.25%), Southwest (LUV +0.36%), and Charter Communications (CHTR +1.46%) 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. Altria
Where there are smokes, there's fire. Let's strike a match and start with Altria. It reports quarterly results on Thursday morning. The long-term case for tobacco products is understandably bearish. The health risks and litigation concerns are only getting louder. Altria's moves to diversify by diving into other vices -- vaping, cannabis, and wines -- haven't exactly paid off.
This has never been much of a growth story. You have to back more than 20 years to find the last time that annual revenue growth topped 6%. It has also failed to exceed analyst earnings estimates by more than a token penny in more than a year.
Image source: Getty Images.
The attraction to Altria is primarily its chunky payout. Altria's 9.2% yield -- like a colorful pack of its cigarettes -- is a flashy lure to making a poor decision. Wall Street pros see revenue and earnings inching lower in this week's financial update. This isn't a surprise. Atlria's revenue has clocked in with a year-over-year decline in 6 of its last 9 quarters.
The narrative could be about to get worse. Rising rates will sting heavily leveraged companies, and Altria fits that bill with more than $27 billion in total debt on its balance sheet. With gas prices moving higher and student debt loan repayments starting up again this month it will mean less money to spend fishing in Altria's candy bowl.
NYSE: LUV
Key Data Points
2. Southwest
Betting against a prolific airline paid off last week, so let's take that flight again. Southwest is a market darling. It's one of the few air carriers to actually pay a dividend, a respectable 3% yield even in this climate with money market funds paying a lot more. Southwest is generally well-liked by consumers. It's also been consistently profitable with more than four decades of positive annual net income outside of 2020.
It doesn't mean that Southwest won't suffer some turbulence this week. The airline will offer up its third-quarter results on Thursday, and investors may want to buckle up. Southwest lowered its revenue guidance last month, as thinning demand weighs on the top line. Rising fuel prices will squeeze the bottom line.
Southwest was already sputtering. Analysts have been slashing their earnings per share targets in recent months, going from $0.98 three months ago to $0.38 now. Wall Street that was hopeful for profitability nearly doubling are now bracing for a decline. Making matters worse, Southwest has fallen short of Wall Street expectations for three consecutive quarters. Unlike it's ticker symbol, I'm not loving Southwest this earnings season.
NASDAQ: CHTR
Key Data Points
3. Charter Communications
Picking stocks that may be susceptible to tumble in a week where hundreds of companies are posting fresh financials is like bringing a bear to a china shop. There are so many things that can break, and let's wrap things up with Charter Communications. Charter's Spectrums is a major player in broadband connectivity and cable, serving more than 32 million customers. It steps up with fresh numbers on Friday morning.
The appeal in getting folks online makes sense in today's climate, but it's tough to be a cable operator in today's cable-cutting climate. Charter ticks off many of the boxes I look for in singling out an earnings report that can go wrong. Analysts have been paring back their forecasts, just like Southwest. It has also missed earnings targets in three of the past four quarters.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Altria, Southwest, and Charter Communications this week.
