The POWR Ratings have been run once again. Check out the latest ratings, and you will find plenty of upgrades, yet also a considerable number of downgrades. If you are looking to add stocks to your portfolio, considering reducing the size of your positions, or searching for stocks to short, it is in your interest to check the POWR Ratings daily. 

Use the POWR Ratings in combination with current events and other relevant information, and you will have a better idea of what stocks you should consider in the days and weeks ahead.

Without further ado, let’s delve into three of the latest POWR Ratings downgrades: American Airlines Group (AAL), EPR Properties (EPR), and Weight Watchers (WW).

American Airlines Group (AAL)

AAL, the result of the merger between U.S. Airways and AMR, has fallen on hard times. Though the company’s formation resulted in the largest international airline in the world, the transportation industry is struggling amidst the coronavirus pandemic. It is quite possible flights to several countries will be limited or barred as the pandemic is sorted out. This is bad news for AAL as the company flies to 95 international destinations spread across more than 50 countries.

AAL is currently trading at $16.81, a figure representing about one-half of its 52-week high of $30.78. The stock may dip back down toward its 52-week low of $8.25 in the weeks ahead, mainly because the holiday season is over and people have even less reason to travel as the pandemic rages on. AAL is adding debt, burning through cash, and struggling to stay afloat. There is even more reason for concern when you consider the fact that the airline industry requires an abundance of capital to operate and has low margins.

All in all, AAL has more than $40 million of aggregate debt, a clear sign that investors should stay away. AAL’s disappointing POWR Ratings reinforce this bearish outlook. The stock has F grades in the Momentum, Sentiment, and Stability components. You can find out AAL’s grades in the Value, Quality, and Growth Components by clicking here. AAL is also ranked toward the bottom of its industry, coming in 24th out of 28 publicly traded stocks. Click here to find other stocks traded in the Airlines industry.

EPR Properties (EPR)

EPR develops and acquires megaplex theaters along with retail entertainment sites, recreational properties, and special properties. EPR is currently trading at $36.99, a figure that represents one-half of its 52-week high price of $72.49. The stock’s forward P/E ratio is 17.16, meaning it is likely a bit overpriced considering it is operating in an industry in the midst of disruption.

EPR has an F grade in the Sentiment and Growth POWR Grade components. Click here to find out how EPR ranks in terms of the Momentum, Quality, Value, and Stability components. It is quite concerning that EPR is ranked 31st out of 38 publicly traded companies in the REITs- Retail space. You can find better stocks in the REITS – Retail industry by clicking here.

The average analyst price target for EPR is $31.63, meaning the stock could have a potential 24% downside. There is a chance megaplex theaters will never resume normal operations as the film industry shifts away from brick-and-mortar theaters to in-home streaming, ultimately hurting the likes of EPR all the more.

Weight Watchers (WW)

WW was certainly popular in past decades, yet the company and its stock are not proving timeless. This weight-loss services provider can rebound when the pandemic eventually ends, yet the masses are not exactly focused on eating healthy while quarantining at home. Making matters worse for WW is that Lifesum, Noom, and several other worthy competitors are gunning for its market share.

Though WW currently has a forward P/E ratio of around 11, the stock still does not hold appeal simply because it operates in a crowded space amidst a pandemic when people are more than happy to scarf down junk food due to social distancing, widespread depression, and high unemployment.

The POWR Ratings reveal WW has D grades in the Growth and Sentiment components. You can find WW’s grades in the Momentum, Stability, Quality, and Value components by clicking here. All in all, WW is ranked 8th out of 12 stocks in the Medical – Consumer Goods industry. Click here to find better stocks in the Medical – Consumer Goods industry.

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AAL shares were trading at $16.60 per share on Tuesday afternoon, down $0.24 (-1.43%). Year-to-date, AAL has gained 5.26%, versus a 2.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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