Wall Street closed out 2023 on fire, moving higher for the final nine trading weeks of the year. But there are still stocks sinking in the rising tide. I thought my three stocks to avoid for last week -- Alibaba Group (BABA +3.53%), Steelcase (SCS +0.00%), and JD.com (JD +8.30%) -- were going to lose to the market. They rose 3%, slipped 3%, and ascended 5%, respectively, for an average gain of 1.7% for the week.
The S&P 500 moved 0.3% higher, so I fell short. I have still been right in 70 of the past 114 weeks, or 61% of the time.
Now is as good a time as any to end this weekly column. I don't mind letting my inner pessimist out -- and I will continue to call overpriced stocks out -- but making short-term weekly market calls has never been a part of my long-term investment strategy. I'm going to close by stretching my timeline. Forget about the week ahead. Let's look at stocks that can come undone over the course of the new year. I see Apple (AAPL +0.33%), Cal-Maine Foods (CALM 0.62%), and Tesla Motors (TSLA +0.76%) losing to the market in 2024. Let's go over my concerns with three very different investments.
NASDAQ: AAPL
Key Data Points
1. Apple
History says you shouldn't bet against Apple in 2024. Going all the way back to 2012, Apple has one good fiscal year of double-digit revenue growth, followed up by back-to-back years of duds with negative or single-digit top-line gains.
- Fiscal 2012 revenue growth: 45%
- 2013: 9%
- 2014: 7%
- 2015: 28%
- 2016: (8%)
- 2017: 6%
- 2018: 16%
- 2029: (2%)
- 2020: 6%
- 2021: 33%
- 2022: 8%
- 2023: (3%)
Apple refreshes its flagship iPhone every year, but it seems as if a major update happens every three years. Is the triennial boost a thing of the past? Maybe not. Analysts see Apple's revenue rising less than 4% this fiscal year, accelerating to a mere 6% in fiscal 2025.
Image source: Getty Images.
I'm all in with the Apple ecosystem of consumer tech products. I even have a small position in the stock. I just don't know if the consumer tech giant can continue to be the country's most valuable company by market cap -- at $3 trillion -- when we're at the midpoint of four unimpressive years of growth at Apple.
There's a reasonable argument to be made that Apple is an all-weather stock. It beats the market when equities are weak as a flight to quality. It's also a winner when the economy's going well and folks don't mind paying a premium for Apple products. However, with the stock soaring 49% in 2023 even as revenue and net income took a small step back, it's hard to justify paying more than 30 times trailing earnings for a slow-growing Apple.
NASDAQ: CALM
Key Data Points
2. Cal-Maine Foods
I do have one short-term call in me, but I expect it to linger for all of 2024. There aren't a lot of earnings reports to go through in the first week of 2024, but Cal-Maine is one of them, and things could go poorly for its shareholders. The egg producer was rolling a year ago, when a supply shortage sent prices, margin, and profitability higher. But you're not paying $10 for a dozen eggs now, and that's bad news for Cal-Maine investors.
Cal-Maine will report financial results of its fiscal second quarter on Wednesday afternoon. Analysts see a 34% year-over-year revenue decline on a brutal 83% plunge in earnings per share. Don't let the chunky trailing yield trick you, either. Cal-Maine pays a variable dividend, and the payouts should drop along with its sliding profitability. In short, this egg producer may not be what it's cracked up to be.
NASDAQ: TSLA
Key Data Points
3. Tesla
Can you believe Apple won't be the most controversial bearish pick on this list? As a Tesla owner for three years, I have nothing but love for the car. However, it's hard to feel confident about the stock in 2024 after seeing it more than double in 2023 despite a few problematic developments.
Revenue growth decelerated sharply in 2023. Profitability has declined, as the need to slash prices to move units has crushed margin. Elon Musk's distractions are problematic, and I'm sure even he would concede that he can be a bit polarizing. Tesla owners remain largely satisfied, but will that continue to be the case in 2024, when non-Tesla cars begin pulling into Supercharger bays and making waits longer? Just wait until they see what happened to resale values over the past year.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Apple, Cal-Maine Foods, and Tesla Motors.
